Human Trafficking Finances: Evidence from Three European Countries [1st ed.] 978-3-030-17808-6;978-3-030-17809-3

Table of contents :
Front Matter ....Pages i-xxii
Human Trafficking and Its Financial Management in Bulgaria (Georgios A. Antonopoulos, Andrea Di Nicola, Atanas Rusev, Fiamma Terenghi)....Pages 1-26
Human Trafficking and Its Financial Management in Italy (Georgios A. Antonopoulos, Andrea Di Nicola, Atanas Rusev, Fiamma Terenghi)....Pages 27-54
Human Trafficking and Its Financial Management in the United Kingdom (Georgios A. Antonopoulos, Andrea Di Nicola, Atanas Rusev, Fiamma Terenghi)....Pages 55-82
Back Matter ....Pages 83-87

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SPRINGER BRIEFS IN CRIMINOLOGY

Georgios A. Antonopoulos Andrea Di Nicola Atanas Rusev Fiamma Terenghi

Human Trafficking Finances Evidence from Three European Countries

SpringerBriefs in Criminology

SpringerBriefs in Criminology present concise summaries of cutting edge research across the fields of Criminology and Criminal Justice. It publishes small but impactful volumes of between 50 and 125 pages, with a clearly defined focus. The series covers a broad range of Criminology research from experimental design and methods, to brief reports and regional studies, to policy-related applications. The scope of the series spans the whole field of Criminology and Criminal Justice, with an aim to be on the leading edge and continue to advance research. The series will be international and cross-disciplinary, including a broad array of topics, including juvenile delinquency, policing, crime prevention, terrorism research, crime and place, quantitative methods, experimental research in criminology, research design and analysis, forensic science, crime prevention, victimology, criminal justice systems, psychology of law, and explanations for criminal behavior. SpringerBriefs in Criminology will be of interest to a broad range of researchers and practitioners working in Criminology and Criminal Justice Research and in related academic fields such as Sociology, Psychology, Public Health, Economics and Political Science.

More information about this series at http://www.springer.com/series/10159

Georgios A. Antonopoulos Andrea Di Nicola Atanas Rusev Fiamma Terenghi •

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Human Trafficking Finances Evidence from Three European Countries

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Georgios A. Antonopoulos School of Social Sciences and Law Teesside University Middlesbrough, UK

Andrea Di Nicola Faculty of Law University of Trento Trento, Italy

Atanas Rusev Security Program Centre for the Study of Democracy Sofia, Bulgaria

Fiamma Terenghi Faculty of Law University of Trento Trento, Italy

ISSN 2192-8533 ISSN 2192-8541 (electronic) SpringerBriefs in Criminology ISBN 978-3-030-17808-6 ISBN 978-3-030-17809-3 (eBook) https://doi.org/10.1007/978-3-030-17809-3 © The Author(s), under exclusive license to Springer Nature Switzerland AG 2019 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Acknowledgements

The study this Springer Criminology Brief is based upon was supported financially by the European Commission (Award reference: HOME/2015/ISFP/A0/ 4000008751). The authors would like to thank the participants of this study for their time and valuable insights, as well as Valentina Piol who, as an intern at eCrime (University of Trento), offered support during the study. The authors would also like to thank Georgios Papanicolaou and Parisa Diba for their comments on parts of the book.

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Contents

1 Human Trafficking and Its Financial Management in Bulgaria 1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Market Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Market Structure and Social Organisation of Trafficking Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.1 Structure of the Domestic Sex Market . . . . . . . . . . . . 1.3.2 The Organisation of the Cross-Border Trafficking . . . 1.4 Financing and Financial Management . . . . . . . . . . . . . . . . . 1.4.1 Source of Capital for Initiating/Sustaining Criminal Operations. Access to Capital in Critical Moments . . 1.4.2 Settlement of Payments . . . . . . . . . . . . . . . . . . . . . . 1.4.3 Costs of Doing Business . . . . . . . . . . . . . . . . . . . . . 1.4.4 Profits and Profit Sharing . . . . . . . . . . . . . . . . . . . . . 1.5 The Role and Impact of the Internet on Human Trafficking Activities and Its Finances . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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2 Human Trafficking and Its Financial Management in Italy . . . . 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Market Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Market Structure and Social Organisation of Trafficking Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.1 Sexual Exploitation: The Central Role of Female Criminal Entrepreneurs . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 Labour Exploitation: The Key Role of the Agricultural Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Financing and Financial Management . . . . . . . . . . . . . . . . . . 2.4.1 Sources of Capital for Initiating/Sustaining Operations of Trafficking in Human Beings and Profiles of Financiers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Contents

2.4.2 Settlement of Payments . . . . . . . . . . . . . 2.4.3 Costs of Doing Business . . . . . . . . . . . . 2.4.4 Profits, Spending and Money Laundering 2.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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3 Human Trafficking and Its Financial Management in the United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Market Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Market Structure and Social Organisation of Trafficking Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Financing and Financial Management . . . . . . . . . . . . . . . . . . . 3.4.1 Sources of Capital for Initiating/Sustaining Criminal Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.2 Settlement of Payments . . . . . . . . . . . . . . . . . . . . . . . . 3.4.3 Costs of Doing Business . . . . . . . . . . . . . . . . . . . . . . . 3.4.4 Profits and Profit Sharing . . . . . . . . . . . . . . . . . . . . . . . 3.5 The Role and Impact of the Internet on Human Trafficking Activities and Finances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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About the Authors

Georgios A. Antonopoulos is Professor of criminology at Teesside University, UK. Andrea Di Nicola is Associate Professor of criminology at the University of Trento, Italy. Atanas Rusev is Senior Analyst (Security Programme) at the Centre for the Study of Democracy, Bulgaria. Fiamma Terenghi is Research Fellow in criminology at the University of Trento, Italy.

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Abbreviations

ACPO CPS DDA EEA FATF FISS FRONTEX GAIN GDCOC GDP GLAA GRETA HMRC ICT ILO JARD ML MoI MPS MSHTU NCA NERSOU NGO NPIA NRM OCGs OECD POCA POCC

Association of Chief Police Officers Crown Prosecution Service Direzione Distrettuale antimafia e antiterrorismo (National Antimafia and Antiterrorism Directorate) European Economic Area Financial Action Task Force Financial Investigation Support System European Border and Coast Guard Agency Government Agency Intelligence Network Directorate General Countering Organised Crime Gross domestic product Gangmasters and Labour Abuse Authority Group of Experts on Action against Trafficking in Human Beings Her Majesty’s Revenue and Customs Information and communication technology International Labour Organisation Joint Asset Recovery Database Money laundering Ministry of Interior Metropolitan Police Service Modern Slavery Human Trafficking Unit National Crime Agency North East Regional Special Operations Unit Non-governmental organisation National Policing Improvement Agency National Referral Mechanism Organised crime groups Organisation for Economic Co-operation and Development Proceeds of Crime Act Proceeds of Crime Centre

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RART ROCU SANS SARs SCDEA SOCA SPOC THB UK UKBA UKFIU UKHTC UNTOC

Abbreviations

Regional Asset Recovery Team Regional Organised Crime Unit State Agency National Security Suspicious activity reports Scottish Crime and Drug Enforcement Agency Serious and Organised Crime Agency Single point of contact Trafficking in human beings United Kingdom United Kingdom Border Agency UK Financial Intelligence Unit United Kingdom Human Trafficking Centre United Nations Convention against Transnational Organised Crime

List of Figures

Fig. 1.1 Fig. 1.2

Fig. 2.1

Victims of trafficking involved in pre-trial proceedings, 2005–2017. Source Prosecutor’s Office data . . . . . . . . . . . . . . . . . Registered crimes, pre-trial proceedings and convicted offenders for THB, 2010–2017. Source Prosecutor’s Office annual reports, MoI annual statistics (2010–2017) . . . . . . . . . . . . . . . . . . Migratory routes from Sub-Saharan countries to Europe. Source Authors’ elaboration on MSNBC (2018) . . . . . . . . . . . . .

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List of Tables

Table 2.1 Table 2.2 Table 3.1 Table 3.2 Table 3.3 Table 3.4

Numbers of victims and corresponding units of criminal entrepreneurs in a local context . . . . . . . . . . . . . . . . . . . . . . . Indicative costs incurred by Nigerian OCG for a trafficking operation (sexual exploitation) . . . . . . . . . . . . . . . . . . . . . . . . Number of potential victims referred to the National Referral Mechanism, 2009–2016 . . . . . . . . . . . . . . . . . . . . . . Number of convictions for human trafficking/modern slavery offences in the UK, 2004–2015 . . . . . . . . . . . . . . . . . Scale of human trafficking of foreign women for the purpose of sexual exploitation, UK by country . . . . . . . . . . . . . . . . . . OCGs identified/disrupted, worth of criminal assets identified and amount identified as unpaid wages holiday pay or excessive transport charges, GLAA investigations (2013–2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Introduction

Keywords Human trafficking
Sexual exploitation
Labour exploitation
Crime money
Information and communication technologies Due to the nature and the increasing prevalence of trafficking in human beings, heavy emphasis has been paid to victims as they typically experience slavery-like conditions, serious abuse and even life-threatening situations. Victimisation has been a focal point of efforts by government agencies, NGOs and international organisations. As a result, two particular forms, sexual exploitation and labour exploitation, have become relatively more visible and thus detectable than other forms of human trafficking, such as organ removal (see, e.g., Andrees and Belser 2009; Antonopoulos and Papanicolaou 2018; UNODC 2018). Accounts on the trafficking of humans for sexual and labour exploitation have little to say about the proceeds generated from this criminal business. According to the Financial Action Task Force (FATF), in addition to its human costs, trafficking in human beings is considered as one of the most profitable criminal businesses with forced labour alone estimated to generate more than US$ 150 billion per year (FATF 2018). In addition, accounts on human trafficking are not typically concerned with the everyday nature and dynamics of criminal investment practices. In fact, although the literature on human trafficking and other illegal markets is booming, research on the financial management of these manifestations of ‘organised crime’ remains, with some notable exceptions, relatively limited (see, for instance, Reuter 1985; Moneyval 2005; Levi 2010; Petrunov 2011; Kruisbergen et al. 2012; Soudijn and Zhang 2013; Antonopoulos et al. 2018; Di Nicola and Terenghi 2016). One exception is the Financing of Organised Crime Projects (CSD 2015; 2018), which specifically focused on the processes and structures involved in financial management of the illegal tobacco trade, cocaine market and VAT fraud across European member states (see also Antonopoulos and Hall 2015), and human trafficking (CSD 2018). Another is the relatively sound understanding of finance-related issues in drug markets more generally (see Reuter et al. 1990; Naylor 2004; Brå 2007; Aziani 2018); existing work addresses prices, costs of

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Introduction

doing business (Caulkins et al. 1999; Moeller 2012), investments and money laundering. The gap in knowledge about financial management in the human trafficking business raises a series of key questions. What are the various forms and sources of financing in the human trafficking business? Which financial processes and practices are used by those involved in human trafficking? How do they settle payments? What (if any) interconnections exist between criminal structures involved in human trafficking and legitimate businesses or financial institutions? Do information and communication technologies (ICTs) offer enhanced financial opportunities for human traffickers, and, if so, in what way? This book deals with these questions. The overall aim is to investigate the mechanisms of financial management in human trafficking in three selected European countries: Bulgaria, Italy and the UK. It addresses the ways in which capital is secured to allow human trafficking businesses to be initiated and sustained, how entrepreneurs and customers settle payments, the costs of conducting business in human trafficking, and how profits from the business are spent and invested. The chapter on Bulgaria focuses on sex trafficking, whereas the chapters on Italy and the UK provide accounts and data on both sex and labour trafficking. “Trafficking” in this book follows the definition introduced by the Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children (Trafficking Protocol), supplementing the 2000 United Nations Convention against Transnational Organised Crime (UNTOC). According to article 3 of the Trafficking Protocol, trafficking in persons is the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation. Exploitation includes, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs (United Nations 2000). The above definition of trafficking further involves two additional conditions: firstly, the consent of the exploited victim is irrelevant when the means specified in the definition have been used (art. 3(b)); secondly, the recruitment, transportation, transfer, harbouring or receipt of a person under the age of 18 (a child) constitute trafficking in persons, even if the particular means specified in the definition have not been used (art. 3(c)) (United Nations 2000). While the UNTOC definition has served as the template for definitions of trafficking found in other pieces of national and international laws, such as the 2005 Council of Europe Convention on Action against Trafficking in Human Beings, or the UK Modern Slavery Act 2015 (which essentially aggregated “human trafficking” and “modern slavery”), it does not resolve with certainty key issues as they arise in the empirical manifestations of the phenomenon (see De Vries 2019). Firstly, the nature of the process leaves a considerable margin for uncertainty as to whether trafficking has genuinely taken place. From a victim-centred viewpoint, the

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process may result in a non-harmful outcome, even though an illegal situation exists (e.g. illegal prostitution or employment of adult migrants). According to the National Crime Agency (NCA), for example, 82% of potential victims exploited for labour in the UK in 2014 were European Economic Area (EEA) nationals legally entitled to live and work in the UK (NCA 2015). Secondly, from the viewpoint of the offending behaviour, the grey area concerns the element of organisation as defined in the main body of the UNTOC (i.e. art. 2(a): “structured group of three or more persons”). Engaging in the trafficking process does not require crossing such particular organisational threshold; in other words, trafficking may not always involve an “organised criminal group” (see Papanicolaou 2008; Oude Breuil et al. 2011; Siegel 2012; Weitzer 2012; Antonopoulos and Papanicolaou 2018). When trafficking is a “transnational” crime, it is best understood as a process embedded in contemporary migration flows facilitated by push, pull and facilitating factors and involving the availability of at-risk population in the countries of origin (see Van Liemt 2004; Europol 2011). Each of the countries’ case studies was based on the data gathered from a variety of sources. Firstly, open sources on the financing of organised crime in general and human trafficking in particular were reviewed. The review included academic articles and reports by research institutes, reports by governments, national and international law enforcement (Europol, national crime agencies, etc.) and international organisations (ILO, UNODC, FATF). Open sources included media sources and press releases from various law enforcement agencies. The available literature and open sources reviewed were in English, Bulgarian and Italian. Secondly, statistical data on human trafficking were gathered from sources at the international and national levels. Where possible, data were collected from sources using a standardised methodology in order to ensure comparability. Thirdly, police files were utilised. This set of data included, among other, intelligence reports by the metropolitan police in the UK. These intelligence reports are essentially problem profiles on either human trafficking in particular or organised crime in general with the purpose to inform tactical tasking and coordinating groups within the police. Finally, the most important source of data for the study included in-depth interviews with a variety of stakeholders related to human trafficking: experts (police officers, investigators, prosecutors, lawyers, criminologists/academic researchers working on the issue), victims of trafficking and (in the case of Bulgaria) criminal entrepreneurs. A total of 98 interviews were carried out in the three countries. In this book, the sources have been coded in order to preserve their anonymity. The first two letters of the code indicate the country (‘BG’ for Bulgaria; ‘IT’ for Italy; ‘UK’ for United Kingdom), ‘E’ indicates an expert, ‘C’ indicates a criminal entrepreneur/trafficker/exploiter, and “V” indicates a victim (Table 1). The interviews were conducted implementing a common protocol (interview guide), which was designed to facilitate consistency of data collection and subsequent analysis of the different aspects of financial management of human trafficking. The interview protocol covered the same topics, including extent and nature of human trafficking, initial capital for financing of THB activities (market entry

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Introduction

Table 1 Number of interviewees, per type of interviewee Experts (E) Criminal entrepreneurs (C) Victims (V)

Bulgaria

Italy

UK

Total

29 23 –

24 – 1

20 – 1

73 23 2 98

thresholds, sources of capital, access to external capital), criminal money management (type and structure of costs, forms and settlement of payments, handling of profits), role of the Internet and new ICT and their impact on financial management. The respondents for the interviews were identified in three ways. Most of the interviewed experts were identified through official correspondence with government, judiciary and law enforcement bodies, as well as non-governmental organisations. Similarly, in order to conduct interviews with some criminal entrepreneurs in Bulgarian prisons, an official request to the prison administration was submitted and, subsequently, an informed consent from the inmates was obtained. Secondly, respondents were asked to recommend other relevant experts and, thus, through a snowball sampling additional interviewees were identified. The third method involved approaching participants from projects in the field of organised crime the authors had previously worked in. In many cases, the conducted interviews were supplemented and augmented through follow-up meetings and additional information acquired via phone or email correspondence. The selected methods and data sources are not without limitations. Data retrieved through interviews with representatives of the authorities are often restricted by factors such as the level of competency and experience of the respondents, institutional priorities and broader political agendas. Another shortcoming of official accounts is a certain stereotyping of ‘organised criminals’, which eventually disregards the broader social and cultural context in which they operate (Hobbs & Antonopoulos, 2014). Similarly, interviews with criminal offenders are often burdened with issues such as accountability and validity of the information shared, as well as selection bias due to impossibility to assure representativeness of the interview sample, thus usually limiting the focus to criminal actors operating on small scale (e.g. Zhang & Chin, 2004). Media sources are also susceptible to various biases—they usually cover cases, which have been brought out to the public by the official authorities and, therefore, portray only ‘success stories’, not to mention the sensationalism and moralistic way of conveying the information. These characteristics substantially decrease the empirical value of media sources for analytical purposes (see Antonopoulos & Hall, 2015). The efforts to overcome the limitations of these data included triangulation of data through different sources. This allowed most dubious accounts to be eliminated and a certain level of data quality and robustness to be achieved.

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Data collection in each country followed the common ethical standards for studies of a similar nature such as obtaining informed consent from each interviewee, ensuring confidentiality and protecting anonymity. Human rights, dignity and fundamental freedoms of all respondents were respected, and all personal data were handled according to national and EU data-protection legal frameworks. Following this introduction, the book is based on three substantive chapters on human trafficking and its financial management in Bulgaria, Italy and the UK, respectively. Each of these chapters provides: firstly, a general overview of the human trafficking business; secondly, an account of the social organisation of human trafficking and the key actors involved; and, thirdly, the financial aspects of human trafficking in terms of sources of financing, settlement of payments, costs of business, profits made and how the profits are spent and further invested, as well as an account of the role the Internet plays in the human trafficking business and its finances. Slight differences in the format in which the material is presented in this book are due to the differential approach taken by researchers in Bulgaria, Italy and the UK, access to relevant actors, as well as differences in the amount of relevant literature per country. The book ends with a concluding chapter, which synthesises the accounts offered in chapters one, two and three.

References Andrees, B. & Belser, P. (Eds.). (2009). Forced labour: Coercion and exploitation in the private economy. Boulder, Co.: Lynne Rienner Publishers. Antonopoulos, G. A. & Hall, A. (2015). The financial management of the illicit tobacco trade in the United Kingdom. British Journal of Criminology. https://doi.org/10.1093/bjc/azv062 Antonopoulos, G. A. & Papanicolaou, G. (2018). Organised crime: A very short introduction. Oxford: Oxford University Press. Antonopoulos, G. A., Hall, A., Large, J., Shen, A., Crang, M., & Andrews, M. (2018). Fake goods, real money. Bristol: Policy Press. Aziani, A. (2018). Illicit financial flows: An innovative approach to estimation. New York: Springer. Brå. (2007). Where did all the Money go? Report 2007:4. Stockholm: Brå. Caulkins, J. P., Johnson, B., Taylor, A., & Taylor, L. (1999). What drug dealers tell us about their costs of doing business. Journal of Drug Issues, 29(2), 323–340. CSD. (2015). Financing of organised crime. Sofia: Centre for the Study of Democracy. CSD. (2018). Financing of organised crime—Human trafficking in focus. Sofia: Centre for the Study of Democracy. De Vries, I. (2019). Connected to crime: An exploration of the nesting of labour trafficking and exploitation in legitimate markets. British Journal of Criminology, 59, 209–230. Di Nicola, A. & Terenghi, F. (2016). Managing finances in the illicit tobacco trade in Italy. Trends in Organized Crime, 19(3–4), 254–272. Europol. (2011). Trafficking in human beings in the European Union. The Hague: Europol. FATF (Financial Action Task Force). (2018). Financial flows from human trafficking. Paris: FATF-APG. Hobbs, D. & Antonopoulos, G. A. (2014). How to research organised crime. In L. Paoli (Ed.), The Oxford handbook of organised crime (pp. 96–117). New York: Oxford University Press.

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Kruisbergen, E. W., Van de Bunt, H. G., & Kleemans, E. R. (2012). Georganiseerde criminaliteit in Nederland. Vierde rapportage op basis van de Monitor Georganiseerde Criminaliteit. Den Haag: Boom Juridische Uitgevers. Levi, M. (2010). Preceeds of crime: Fighting the financing of terrorism. Criminal Justice Matters, 81(1), 38–39. Moeller, K. (2012). Costs and revenues in street level cannabis dealing. Trends in Organised Crime, 15(1), 31–46. Moneyval. (2005). Proceeds from trafficking in human beings and illegal migration. Strasbourg: Council of Europe. Naylor, R. T. (2004). Wages of crime. Ithaca, NY: Cornell University Press. NCA. (2015). NCA strategic assessment: The nature and scale of human trafficking in 2014. London: NCA. Oude Breuil, B., Siegel, D., van Reenen, P. Roos, L., & Beijer, A. (2011). Human trafficking revisited: The legal, law enforcement and ethnographic narrative on sex trafficking to Western Europe. Trends in Organised Crime, 14(1), 30–46. Papanicolaou, G. (2008). The sex industry, human trafficking and the global prohibition regime: A cautionary tale from Greece. Trends in Organised Crime, 11(4), 379–409. Petrunov, G. (2011). Managing money acquired from human trafficking. Trends in Organised Crime, 14, 165–183. Reuter, P. (1985). The organisation of illegal markets. Washington, D.C.: National Institute of Justice. Reuter, P., MacCoun, R., & Murphy, P. (1990). Money from crime. Washington, DC: RAND. Siegel, D. (2012). Mobility of sex workers in European cities. European Journal on Criminal Policy and Research, 18, 255–268. Soudijn, M. R. J. & Zhang, S. X. (2013). Taking loansharking into account: A case study of Chinese vest-pocket lenders in Holland. Trends in Organised Crime, 16, 13–30. United Nations. (2000). Protocol to prevent, suppress and punish trafficking in persons, especially women and children, supplementing the United Nations convention against transnational organized crime. Adopted by UN General Assembly resolution A/RES/55/67 of 15 November 2000). UNODC. (2018). Global report on trafficking in persons, 2018. New York: UNODC. Van Liemt, G. (2004). Human trafficking in Europe: An economic perspective. Geneva: ILO. Weitzer, R. (2012). Sex trafficking and the sex industry: The needs for evidence-based theory and legislation. Journal of Criminal Law and Criminology, 101(4), 1337–1370. Zhang, S. & Chin, K.-L. (2004). Characteristics of Chinese human smugglers. Washington, D.C.: U.S. Department of Justice.

Chapter 1

Human Trafficking and Its Financial Management in Bulgaria

1.1 Introduction Trafficking in human beings (THB) for the purpose of sexual exploitation is considered one of the largest Bulgarian criminal markets since the beginning of the new millennium (CSD 2012). After the lifting of Schengen visas for Bulgarian nationals in 2001, Bulgaria became a major country of origin for the trafficking in human beings exploited in the EU. The existing research on THB and prostitution in Bulgaria indicates that these criminal activities not only generate huge incomes for Bulgarian organised crime but also has detrimental social and economic impact on local communities (Bezlov et al. 2016; CSD 2007, 2012). The victims of THB in Bulgaria are mainly women trafficked for sexual exploitation, but other enduring criminal networks involved in trafficking for forced labour, sham marriages, forced begging and pickpocketing have also been detected, as well as criminal networks involved in trafficking of pregnant women for the purpose of selling their new-born babies (GRETA 2016). Recognising the extent of the problem of trafficking, Bulgaria has expanded and sharpened its legislation during the last 15 years. Human trafficking was first introduced as a separate offence in the Criminal Code for the first time in 2002, following the ratification of the Palermo Protocol. The new articles generally adhered to the definition laid down in the protocol and addressed both national and trans-border trafficking in human beings. However, in contrast to many European countries, Bulgaria criminalises trafficking irrespective of the consent of the victim, viewing the use of any special means such as coercion or the giving of benefits as aggravating circumstances (PPB 2010). Since their adoption, the Criminal Code articles have been amended and complemented in 2009 and 2013 to incorporate additional types of trafficking such as trafficking of pregnant women with the purpose of selling their new-born babies and trafficking for forced begging. The latest amendments were

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1 Human Trafficking and Its Financial Management in Bulgaria

introduced as a result of the harmonisation of the Bulgarian legislation with the 2011 EU Directive on Human Trafficking.1 Since 2007, when Bulgaria and Romania joined the European Union, and especially since 2013, when the restrictions on the access of the two countries to the common EU labour market were removed, THB related processes have undergone a significant transformation. The freedom to travel to and legally work in EU member states has barred criminal networks from controlling victims’ access to the common European labour market, including that of sexual services. In addition, as European and Bulgarian law enforcement and judiciary bodies have stepped up cooperation with their counterparts on an international scale, criminal networks have become less likely to use violence against THB victims and, therefore, less efficient in recruiting new victims or exploiting already recruited victims. The socio-demographic changes such as the smaller number of children born after 1990 and migration towards big cities have also contributed to shrinking the pool of persons vulnerable to THB (Bezlov et al. 2016). The criminal networks evolved also in their attempt to adapt to the changing environment, going through several stages shaping their characteristics. The first period of criminal networks’ development began in the mid-1990s when the trafficking of women for sexual exploitation was strongly linked to the domestic prostitution market. During this period, the large criminal syndicates of the so called “violent insurers”2 turned the sex market into an important source of revenue, establishing control over supply through ownership of hotels, nightclubs and bars in major cities and resorts. Use of violence, often in extreme forms, was widespread (CSD 2007). With the lifting of Schengen visas, which marks the start of the second period, Bulgarian criminal organisations already established in some of the member states could dramatically expand their prostitution business. Initially, it was the big criminal players—local units of the so called “violent insurers” in Bulgarian cities—that made use of this opportunity. Later, some independent procurers and networks stepped in the cross-border trafficking as well. In this period, THB for sexual exploitation became the largest source of revenue for organised crime and Bulgaria, albeit a small country, became the second or third biggest country of origin for THB victims in a number of EU states (Bezlov et al. 2016; CSD 2012). The third period started after the initial post-accession period (2007–2009). Bulgarian criminal networks rapidly adapted to changing conditions. Patterns for controlling THB victims started to rely primarily on non-violent methods and economic inducement. The big criminal syndicates were largely replaced by loose networks with flexible arrangements and frequently changing composition of actors, although 1 Directive

2011/36/EU of the European Parliament and of the Council of 5 April 2011 on preventing and combating trafficking in human beings and protecting its victims, and replacing Council Framework Decision 2002/629/JHA, OJ L 101, 15.4.2011. 2 The so called “violent insurers” or grupirovki were the first powerful organised crime groups in Bulgaria, which emerged in the early 1990s and started their criminal activities with a wide use of violence and extortion. Most of them established private security and insurance companies as fronts for their extortion. Subsequently, most of them developed extensive crime portfolios including drug distribution, prostitution, contraband, etc.

1.1 Introduction

3

hierarchically structured organisations did not disappear. On the other hand, sex workers in the different EU member states became less and less dependent on organised crime infrastructure and logistics (Bezlov et al. 2016). Given the overwhelming prevalence of the trafficking for sexual exploitation in Bulgaria, the analysis below focuses exclusively on this type of trafficking and its financial management inside and outside the country. The THB for sexual exploitation is deeply interwoven with the domestic and foreign prostitution markets and during the collection of data and its analysis it became apparent that it is almost impossible to distinguish between these two phenomena. Much has been written on the problem of trafficking in human beings in Bulgaria. However, one of the least explored aspects of this nefarious phenomenon remains its financial aspects, as well as the business models of the criminal groups behind it.

1.2 Market Overview According to the Prosecutor’s Office of Bulgaria, 90% of the victims of trafficking for the period 2005–2016 have been female (PPB 2017). Trafficking for labour exploitation is the second most common type of THB, but it is significantly less common, with only 12% of pre-trial proceedings in the period 2011–2015 dealing with this type of trafficking (GRETA 2016). The data from Bulgaria corresponds to the Europol assessment for EU countries whereby organised crime groups (OCGs) involved in THB for purposes other than sexual exploitation is about 10% (Europol 2016). During the last 10 years, there were several attempts to estimate the number of sex workers and respectively the scale of both cross-border and domestic trafficking in human beings. The first assessment of cross-border THB estimated that the number of Bulgarian sex workers abroad was between 8000 and 18,000 in the period 2003–2007 (CSD 2007). The second estimate on the scale of cross-border trafficking referred to the period 2005–2009 and indicated that between 11,000 and 21,000 sex workers from Bulgaria worked in other EU countries and generated about e1.5 billion, which is roughly equal to 2.6–2.7% of the national GDP for the same period. Roughly, half of these proceeds are controlled by the Bulgarian organised crime (CSD 2012). The most recent threat assessment on serious and organised crime in Bulgaria for the period 2012–2017 arrived at similar estimates (CSD 2018). Estimates on the revenues of the domestic sex market also vary—according to the estimations in 2007, the number of sex workers in Bulgaria was 5000–6000 and the generated revenues amounted at e115–120 million (CSD 2007). The second assessment estimated the internal market at e123–e205 million generated by 6000–10,000 sex workers (CSD 2012). The most recent assessment indicated e115–e135 million revenues generated by the domestic market (CSD 2018). The public data from several EU member states reveal a dwindling number of victims from Bulgaria since 2012. The Dutch and German data on recorded THB victims indicate that the number of victims from Bulgaria in 2016 was 50% lower

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1 Human Trafficking and Its Financial Management in Bulgaria

579

540 432 394 329313

447

538

508

475 491462 409 381

447 409

445

316 294

288

250240 223

211198

2005

506

2006

2007

2008

2009

2010

All victims

2011

2012

2013

2014

2015

2016

2017

Female victims

Fig. 1.1 Victims of trafficking involved in pre-trial proceedings, 2005–2017. Source Prosecutor’s Office data

than in 2012 (Nationaal Rapporteur 2017). Similarly, the German data shows that the number of Bulgarian victims of THB for sexual exploitation have decreased by 49% in 2015 compared to 2012 (BKA 2016). At the same time, the number of victims identified by the Bulgarian authorities remains stable (see Fig. 1.1). According to the latest GRETA report, for the period 2011–2015 the number of victims of domestic trafficking in Bulgaria is roughly equal to the number of victims of cross-border trafficking (GRETA 2016). However it should be noted that domestic trafficking and cross-border trafficking are interlinked and in many cases appear to be simply stages of one and the same criminal activity (CSD 2007, 2012; Pick Monitop 2010). Often, following the recruitment, the victims are initially exploited within the country. Common destinations for newly recruited victims are Sofia, Varna and Bourgas or some of the summer or winter resorts depending on the season. At a later stage they are trafficked and exploited abroad, but their traffickers periodically return and exploit them at home as well. Nevertheless, due to the increasingly easier access to the sex market in the EU, a growing number of victims start working abroad, without prior exploitation at the domestic prostitution market (see next section for further details). At the time the interviews for this report were conducted, the number of THB victims was deemed to be on the decline judging from the observed significant decrease in the new investigations initiated by the Prosecutor’s Office. The number of the new proceedings plummeted from 141 in 2012 to 86 in 2017 (PPB 2013, 2018). However, closer examination of the factors behind this suggested a somewhat different dynamic. Apparently, several factors related to law enforcement institutions have contributed to this significant drop in the investigations in the last 5 years. The most significant impact had the restructuring of the Directorate General Countering Organ-

1.2 Market Overview

134

138

5

141

119 107 97

111 101

104 92

86

85

77 58

62

60

59 49

45

37

36

2015

2016

29

2010

2011

2012

Initiated pre-trail proceedings

2013

2014

Convicted persons

62 52

2017

Registered crimes

Fig. 1.2 Registered crimes, pre-trial proceedings and convicted offenders for THB, 2010–2017. Source Prosecutor’s Office annual reports, MoI annual statistics (2010–2017)

ised Crime (GDCOC), the agency most actively involved in THB investigations. The agency went through two major reorganisations during the period 2012–2015, which led to an abrupt suspension of numerous ongoing investigations and loss of momentum (BG-E12, BG-E14, BG-E20, BG-E23, BG-E24). These institutional reforms coincided with the restructuring of the Public Prosecutor’s Office and the establishment of new Specialised Prosecution Service in 2012, which additionally contributed to the decrease in the number of the initiated pre-trial proceedings (see Fig. 1.2).

1.3 Market Structure and Social Organisation of Trafficking Networks Once extensively controlled by organised crime and practically cartelised in all big cities and resorts, the prostitution market in Bulgaria is now rather fragmented and decentralised. Similar tendencies have been reported for cross-border trafficking (Bezlov et al. 2016; CSD 2012; Ctoqev 2016). Despite the fragmentation of the prostitution market and the increased share of independent actors, the human trafficking business in the country and abroad still remains largely controlled by Bulgarian organised crime. Since the 1990s, no criminals from other nationalities have ever had noticeable presence in the country or played any role in cross-border trafficking. Generally, the following profiles of sets of actors can be distinguished: hierarchically structured organisations; loose networks of collaborating independent traffick-

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1 Human Trafficking and Its Financial Management in Bulgaria

ers; family/clan-based organisations; independent traffickers (Bezlov et al. 2016; Petrunov 2014). The hierarchically structured organisations are usually remnants of the formidable violent entrepreneurship syndicates that emerged in the early 1990s also known as grupirovki, as well as robust regional criminal organisations that emerged in the beginning of the 21st century (CSD 2007). Unlike their predecessors, nowadays these organisations rarely resort to violence and instead extensively use legal business structures as a cover up for their operations and various soft methods to control the sex workers (BG-E5, BG-E19). Their structure has a great deal of specialisation and separation of specific functions and roles among members. Depending on the sophistication of the organisation, the specific roles might include one or several of the following—organisers (“the boss”), recruiters, drivers, money collectors, bodyguards/enforcers, supervisors, money carriers and straw persons acting as legal business owners (BG-E5, BG-E11). They can also have 3–4 layers of control between the ultimate organiser, or boss, and the sex workers. Before 2012, several such groups have split and cartelised the market in Sofia and in some of the big regional cities and resorts and operated the so called “chains” of brothels and sex venues (BG-E5, BG-E6). The accession of Bulgaria to the EU in 2007, the targeted law enforcement pressure on the market in the period 2010–2012, and the increasing use of information and communication technologies (ICT) in the prostitution markets have to a large extend reduced the opportunities for cartelisation and control over the prostitution markets. Whereas in the past these organisations were exerting control on the access to the market by coercion and enforcing protection fees to all independent actors, nowadays they would rather contract the sex workers as employees and exert control through the use of market mechanisms, such as providing access to profitable locations or venues, and securing protection against rival competition and police authorities (BG-E17, BG-E25). Other similar arrangements include striking deals with independent traffickers for granting access to their locations or venues for a fee. The fee may include advanced payment and a commission based on the earnings of the sex workers, who are allowed to work in their venues. Depending on the size and sophistication of the organisation, its leaders might have invested in venues both in Bulgaria and abroad, while other have opted only for a single venue either in Bulgaria or abroad (BG-E11, BG-E21). The loose networks usually comprise of several independent traffickers, wherein each of them independently recruits women from Bulgaria or elsewhere, as a rule with their consent, and secure a location for them. Each procurer would also provide his sex workers with protection from violent clients, secure lodging and clients, arrange residence permits, licenses and resolve other administrative issues. Lately, traffickers have even been communicating with clients online, mostly via social networks. To ward off competition, the procurer resorts to his network of friends and compatriots. Under this modus operandi, each trafficker takes care of all aspects related to the business and this allows him to recruit two or three girls at a time. There are also some examples of procurers managing 3–4 girls in different EU countries who are not aware of each other. When looking for new girls, he entrusts

1.3 Market Structure and Social Organisation of Trafficking Networks

7

guardianship over the prostitute to friends from his network and returns the favour when asked by another network member (BG-E20, BG-E27, and BG-E29). Procurers often marry the prostitute to avoid getting involved with the police (BG-E5). However, this type of arrangement works out rarely as conflicts often arise among traffickers, since competition for better venues and high-earning sex workers is fierce (BG-E19, BG-E20). Family/clan based organisations are typical for traffickers from the Roma community, where usually members of the organised crime group are part of the extended family. The structure usually follows the familial links with an elder authority at the top of the organisation and specific tasks divided between the members of the family. These organisations usually traffic women from the same ethnic group and even other family members. In some cases, they also resort to buying women from other groups or networks (BG-E5, BG-E11, BG-E13, BG-E14). The independent traffickers are usually a couple (married or not) or a trafficker with 2–3 sex workers, who operate as a family/small business. The women solicit customers and provide sexual services, while the men provide protection and facilitation. Independent traffickers do not share their earnings with some criminal organisation but may pay a fixed fee to them in order to obtain the right to work at a particular location. Thus they keep all the revenues for themselves, but risk extortion demands and violent assaults from other competitors or being reported to local authorities as there is no group or network to protect them (BG-E17, BG-E26). All types of trafficking organisations use the same strategy to reduce risk of detection and apprehension by the police, which involves acquiring consent of the exploited women and pre-negotiating the division of their earnings, using violence in exceptional cases, and often posing as their friends or spouses. On the other hand, the collected data indicates that criminal networks involved in trafficking offer sex workers both economic and safety advantages. Women who try to work on their own appear to be more likely to become victims of violent incidents or to earn less because of their limited access to profitable locations in central and western Europe where demand for sex services is high (BG-E19, BG-E22).

1.3.1 Structure of the Domestic Sex Market The extent of involvement and modus operandi of these sets of trafficking actors both at the domestic prostitution market and the prostitution markets abroad varies among the different market segments. The domestic prostitution market in Bulgaria can generally be divided among three main segments—outdoor, indoor and high-end prostitution (Bezlov et al. 2016; CSD 2012). The market segments can be distinguished based on the place where the sex services are provided, the price range, and the clientele. Similar division can also be applied to the prostitution markets abroad, although the price brackets differ from country to country. The lowest market segment in Bulgaria is outdoor prostitution, which comprises of sex workers who offer sex services mostly in public, open spaces. One group

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1 Human Trafficking and Its Financial Management in Bulgaria

focuses on frequented places in big cities such as railway and bus stations, bridges, shoddy hotels, byways and side alleys parallel to main streets. Some of them migrate to the outskirts of resorts during the tourist seasons. The second group works along highways, main roads and the roads close to border crossings, mostly at parking lots, motels, crossroads and the like. Their main clients are truck drivers. The prices of both groups are rather low, ranging from e5 to e15 per client. Depending on the locations, prostitutes can service from 3–5 to 10–20 clients daily. The sex workers in this segment are recruited from various socially disadvantaged groups, mostly from Roma neighbourhoods (CSD 2007; Ctoqev 2016). Each neighbourhood serves as a supply source for a particular region in Bulgaria. Other such pools are heroin addicts, young women raised at institutions or extremely poor families. This segment is mostly occupied by the family-based organisations from the Roma ethnicity, as well as some independent traffickers. In the past, some hierarchically structured organisations that strived to monopolise or at least cartelise the prostitution market in their cities were imposing protection fees on the procurers operating in this segment for the right to operate at a given location. Currently the practice for levying protection fees continues, although monopolies and oligopolies at prostitution markets in the capital and in the regional cities seized to exist. This niche is taken over in some regions by poly-criminal organisations that are involved in a variety of other criminal activities such as drug dealing, extortion, human smuggling, etc. Procurers and the sex workers are usually charged a set fee, which has ranged from e10–e15 per day to e50–e100 per week at different times (BG-E19, BG-E22). The largest number of sex workers operates in the indoor prostitution segment, which can be provisionally divided in several substrata. The bottom one is occupied by the so called “apartment prostitution” named after the habitual locations where sex services are preformed—rented flats on the first floors of residential buildings. Prices vary depending on the town from e30 to e503 per hour of standard sex. VIP or escort clubs occupy the next substratum at which prices are higher and control over prostitutes is more lenient. The segment also includes the escort services. The average prices range from e50 to e75 per hour of standard sex. The most luxurious substratum comprises erotic bars and adult clubs. Sex workers at such erotic bars take in additional revenue in the form of soliciting drinks from customers and dancing. The owners of such venues as a rule pre-select the sex workers before contracting them and tend to regularly replace them with new ones. Standard sex average prices range between e150 and e250 per hour. Brothels and other sex venues are usually located in big cities, although other popular locations are resorts and border towns. Part of the sex workers who work in the biggest cities migrate to coastal resorts from June to September and to mountain ones from December to March. Usually owners of sex venues in some of the big cities also keep such venues at the resorts, so the sex workers are moved from the big cities to the resorts and back. Border prostitution in towns such as Svilengrad

3 These

prices are given as an example however, in the last few years prices have consistently increased countrywide.

1.3 Market Structure and Social Organisation of Trafficking Networks

9

at the Turkish border and Sandanski and Petrich near the Greek border also takes place predominantly in various bars and hotels and the clients are predominantly foreigners. The sex venues have their own internal rules and the workers that breach them bear financial penalties. The number of sites belonging to the indoor prostitution segment in Sofia, for example, has varied throughout the years depending on the demand for sex services and the extent of law enforcement pressure over criminal groups. The number of flats and clubs in Sofia, for instance, has ranged between 100 and 300, of VIP clubs from 20 to 30, and of erotic bars from 10 to 20 (BG-E19, BG-E22). This market segment is dominated by hierarchical groups, who usually invest in sex venues at lucrative locations—in the city centre of Sofia or some of the big cities, as well as in the coastal and mountain resorts. However, in the period 2010–2012 the controlled chains of apartment brothels in big cities disappeared giving way to independently working (mostly in pairs) prostitutes renting their own living space, increasingly offering their services online, and occasionally paying criminal networks security fees to guard them against possible threats from clients. Many independent procurers have also started to operate in this market segment running apartments with their own sex workers or providing call girl services with extensive use of online advertising. Hierarchical groups used to levy protection fees on such actors in the past but after 2012 a significant number of independent procurers ceased paying for protection. The attempts to re-establish monopoly over certain markets, e.g. Varna, have not succeeded due to law enforcement pressure and resistance from the other local groups (BG-E12, BG-E18). The high-end prostitution market segment accommodates various legal business structures that are used as cover for offering exclusive sex services. Typical businesses used in this market segment include fashion, model and advertising agencies, as well as talent managing companies working with dance troupes and pop folk performers. These bogus fashion agencies hire young women as models under a permanent or temporary contract to participate in fashion shows, advertising campaigns, TV shows, product promotions, movies, magazine photo sessions, etc., for a particular fee. However, many of the women are enticed to perform sex services and thus the line between their duties as fashion models and escorts becomes blurred. The price of sex is e500 and over, but as collected data indicates, the financial side is often less important for the criminal organisations compared to the opportunity to influence the political and business elites in Bulgaria. This segment is also dominated by hierarchical organisations, which in many cases also have presence in the indoor segment (BG-E6, BG-E12, BG-E18).

1.3.2 The Organisation of the Cross-Border Trafficking The structure and functioning of the cross-border trafficking closely resembles the domestic prostitution market. Street sex workers would be commissioned to work on selected streets, parking lots and open spaces in large European cities. Sex workers

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1 Human Trafficking and Its Financial Management in Bulgaria

in the indoor segment are exploited in a variety of sex venues such as brothels, hotels, sex clubs, bars and windows, and the like after traffickers negotiate access with the respective owners or criminal organisations that controls them. Criminal organisations operating at the high-end prostitution level solicit foreign clients during the modelling agencies’ tours abroad, usually in neighbouring countries such as Greece and Turkey, more exclusive destinations such as Dubai, and less often in Italy and France. Subsequently the sex workers are secured engagements in thematic or weekend parties, and business conferences (BG-E19, BG-E22). Some of the big hierarchical organisations operate both at the domestic and foreign prostitution markets. However, the regional trafficking networks in most cases do not have presence at the domestic market, but prefer to organise only cross-border trafficking to EU countries, Switzerland or Norway. They recruit sex workers from the towns they are based or the nearby smaller towns and commission them to particular European cities. Criminal organisations and networks from Bulgarian cities such as Sliven, Pazardzhik, Stara Zagora, Haskovo, Pleven, Ruse, Dobrich, Vidin, etc., have established trafficking channels to Brussels, Strasbourg, Rotterdam, Oslo, Cologne, Vienna, Valencia, Rome, Koblenz, etc. To escape dependence and payment of protection fees, the regional procurement networks operate independently from the big hierarchical organisations, when supplying sex workers to the EU (BG-E20, BG-E29). The big hierarchical organisations with established presence on the domestic market, on the other hand, have a different business model that guarantees better control over the sex workers. The newly recruited women first work in some of the bigger Bulgarian cities or resorts and after proving their loyalty and accountability are commissioned to more profitable locations abroad (BG-E19, BG-E27, BG-E29). The sex workers periodically return to work back in Bulgaria upon completion of a certain period or whenever some problem arises (e.g. extortion demands from other criminal groups, conflicts with competitors, police operations, etc.). In contrast, the sex workers trafficked by the regional networks would usually have between-jobs spells at home or sometimes work at a brothel owned by the group with domestic presence. As the interviews suggest, the opportunities of the Bulgarian traffickers to participate in the EU sex market and specifically in the outdoor and the indoor segment have widened with time. At the start of the century the newly formed regional hierarchical groups and loose networks would stick to a certain European city or region, which they get to know well and subsequently they started to expand to new cities, thus doubling the number of trafficking destinations in recent years (BG-E19, BG-E21). Whereas in the past, a few big organisations and networks controlled the trafficking channels, currently various trafficking organisations started to invest abroad in order to exert direct control of the victim’s workplace by purchasing/renting sites such as bars, restaurants, hotels, night clubs, windows, escort websites, escort companies, etc. This strategy involves establishing of legal business structures as a front of their operations and along with the advantages of enhanced form of control over the victims, it also offers them the opportunity to better shield their activities from police scrutiny (BG-E19, BG-E22).

1.4 Financing and Financial Management

11

1.4 Financing and Financial Management 1.4.1 Source of Capital for Initiating/Sustaining Criminal Operations. Access to Capital in Critical Moments Many of the interviewed traffickers in the present study claim that no initial investment is needed to enter the market of THB for sexual purposes (BG-C13, BG-C14, BG-C17, BG-C20, BG-C3, BG-E9). However, entering the prostitution market can have different forms—from simple procuring of a victim to a close circle of acquaintances to securing a profitable location in some brothel abroad. While the former may not bear any financial costs, the latter appears to require initial investments. For example, some of the interviewed offenders mention that in the indoor segment securing access to a profitable location for a sex worker in Bulgaria can cost from e1000–e3700 (BG-C3, BG-C7) and abroad from e2000–e4000 (BG-C4, BG-C7).4 In addition to that they also disclose costs for recruitment, transportation and lodging. Certainly larger investments are needed if a trafficker aims at becoming an owner or manager of a brothel or other sex venue. For example, one of the interviewees indicated that the rent of an adult club at the Bulgarian coast for the summer season amounts at e60,000, due in advance (BG-E3). More profitable establishments in Western Europe certainly cost a lot more; for example, one of the interviewed police officer reported that a trafficker invested one million euros to purchase an adult club in Spain (BG-E21). Collected data indicates that in many cases social ties and networks are being converted into quantifiable value, whereby initial capital for a market entry, or a market expansion is loaned to the newcomer from actors who are already established in the trafficking for sexual exploitation, be it friends or extended family members (BG-C10 and BG-C7 for expansion; BG-C2 for entry). Accounts of social ties, connections, friends and extended family that factor in the genesis of human trafficking endeavours abound in the data collected from the respondents. At least three instances reveal that being part of the wider network of traffickers for sexual purposes exposes the members to opportunities for lines of quick credit with preferential interest rates when borrowing from “colleagues” (BG-C8, BG-C6, BG-C5). Being connected to people in the business, which entails trust and mutual assistance for starting up appears to be a crucial element in facilitating initial expenditures and diminishing or removing altogether barriers to market entry. The prevailing model for starting up is epitomised by a statement from one of the respondents that highlights the importance of social networks and social capital: “if you have a girl ready to go right from the start, every trusted person will help you out” (BG-C10). In this regard collected data is in line of the existing literature on the importance of social capital for a market entry. Whereas opportunities for most conventional crimes are countless, the sophistication of its activities makes organised crime opportunities 4 The quoted sums are requested as advance payments for renting a place. The period of renting can

vary from three months to one year.

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1 Human Trafficking and Its Financial Management in Bulgaria

less evident. Therefore, the market entry barriers for organised crime are far greater than most general crimes, and operations require close cooperation between offenders (van Koppen 2013). Cross-border trafficking of human beings often involves complex processes of coordination, whereby finding suitable co-offenders requires building of sufficient trust. Therefore, organised crime offenders in human trafficking use social ties and networks to establish trust before any cooperation and collusion takes place (van Koppen 2013; Von Lampe & Johansen 2004). Social relations and network dynamics ensure that the recruitment of new offenders and the creation of new partnerships are not the same as traditional models claim. Family, friends and acquaintances work together and introduce each other to others and are the base of criminal entrepreneurship and expansion (Kleemans & Van de Bunt 1999). The observed differences in the source of initial capital appear to be contingent on the type of market entry, i.e. independently or through an already established network or criminal organization, as well as on the type of market segment—outdoor, indoor and high-end. Independent traffickers may need to raise initial capital to secure access to clients (e.g. place on the street or in a brothel, window in a red light district, etc.), logistics (e.g. transportation, lodging, work permit, etc.) and visual make-over of the trafficked person, e.g. high-end clothing, accessories, cosmetics, hair and body care, etc. Some of them initially start in Bulgaria and re-invest the generated proceeds to fund cross-border trafficking (BG-E4). Criminal entrepreneurs joining established trafficking networks or organisations do not need to cover all these cost by themselves, since the network or the group grants the access to these assets or at least they may receive initial capital for related expenses through the network or from the boss of the group. The investment is then repaid from the sex worker’s earnings (BG-C10, BG-C1). Nevertheless, joining an established network requires the newcomers to prove they are trustworthy and accountable. This is also indicative that market entry for prostituting girls and women is also heavily contingent of social connections and networks. Among the possible sources of startup capital mentioned by the interviewed respondents were borrowing money from friends, family and relatives (BG-C11, BG-C12, BG-C13, BG-E1); revenues from legal business (BG-C10), proceeds from another illegal activity (BG-C16, BG-E14) and loans from usurers (BG-C7). Joining an established trafficking/procuring operation provides a number of advantages for both sex workers and pimps. Networks and groups have more available capital which can be channelled to serve different purposes as needed, such as recruitment activities, transport and accommodation abroad, as well as connections and a line of credit in case of urgencies. The advantage is most noticeable with regard to recruitment and starting costs. Apart from everything, starting an independent operation entails a number of risks. Independent sex workers are vulnerable to violent or fraudulent customers or to networks or groups trying to subdue them to their control. Procurers and traffickers not part of a group also have less resources and, therefore, have to carry out all activities associated with the business. Independent pimps and traffickers thus often choose to have or appear to have a limited number of sex workers under their control (up to 3) as with more women “the problems are bigger and are related to more costs” (BG-C20, BG-C11, BG-C12).

1.4 Financing and Financial Management

13

Borrowing money is also a tactic used to weather out difficult moments. However, borrowing from loan sharks is considered as highly risky due to the exorbitant interest rates and both pimps and sex workers try to avoid it. Generally, traffickers prefer to settle such situations through borrowing from other members of their network (BG-C3, BG-C13, BG-C20). Sex workers appear to have a broad creditor base, that includes pimps, colleagues and in some cases clients (BG-C16, BG-C23). There is a general arrangement that there are loan options for persons in the trafficking business with more favourable interest rates than those of loan sharks. The interest rates for such intra-industry/network lending are 10–20% (BG-C5, BG-C6, BG-C8). Rates may still be higher in cases of a novice who is yet to prove trustworthy.

1.4.2 Settlement of Payments Data indicates that there are various modes for the settlement of payments within the trafficking network and outside actors alike, wherein the sole common denominator is the pre-eminence of cash transactions. Almost all payments are made in cash—clients pay cash to sex workers (variably before or after the service) and the money is subsequently transferred to the higher levels of the organisation in cash as well (BGC1, BG-C10). Women report and account for their earnings to pimps “day by day” (BG-C6, BG-E19, BG-C4), often via coded messages through messaging services or SMS (BG-E17). Sex workers may receive their shares periodically in cash by their traffickers/procurers or trusted persons, in some cases every three days (BGC3). Cash proceeds are then often transferred up the chain through trusted payment facilitators, which appear to be insiders rather than the typical money mule (BGC10). Exceptions do exist as sometimes clients can pay for sexual services via bank transfer/credit card, whereby such payments are registered as a legitimate service, e.g. massage. This is particularly the case whereby trusted clients based in western European states order sex services from sex workers that may be currently based in Bulgaria. The wired money is used for travel and advance payment for the sexual services (BG-C5, BG-C16). It should also be noted that in the domestic indoor and high-end prostitution segment, many sex workers have also fictitious contracts as office assistants, masseuses, waitresses, hostesses, barmaids, exotic dancers, receptionists, hotel maids, etc. The contracts are usually signed with bogus companies and fixed at minimum wage and for minimum working hours. However, they will still receive payments under these contracts and all respective social and healthcare contributions will also be covered. Some respondents report that they receive these payments via bank transfers (BG-C4, BG-C9). In this way the traffickers try to conceal the true nature of their activities and not raise suspicion in the law enforcement and other regulatory agencies (BG-E3, BG-E9). Procurers and traffickers transferring profits from abroad may use money transfer services, such as Western Union (BG-C1). However, they will take a number of precautions, such as using intermediaries (money mules) to withdraw the money and

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deliver the amounts to the intended recipients (BG-C10). Western Union is also a preferred method for sex workers, who send small sums to their families (BG-C7, BGC8, BG-C9). Another method for sending money to Bulgaria is through van drivers servicing routes from Bulgaria to western Europe, some of which may be part of other—irrelevant to sex—trafficking and/or smuggling networks, e.g. cannabis from the Netherlands (BG-C7, BG-E1, BG-E8). Procurers and traffickers may use trusted third parties for settling payments with facilitators outside of the networks such as club owners or corrupt police. There is at least one account that describes a more sophisticated system of settling transactions. In this case the trafficking ring-leader uses a multitude of bank accounts under his control, which are registered to dummy entities or shell companies in order to transfer payments to external actors. The dummy accounts are employed on a rotating basis so as to avoid suspicion (BG-C1). Cash mules are also used, particularly for international payment settlements (BG-C10). When operating abroad some traffickers are wary of getting directly involved in all payment settlement activities, as being seen around sex workers and in particular known clubs and hotels may arouse suspicion. Therefore, in some cases settlements with clubs and hotels are delegated to the women who may transact directly with the owners of the establishments where sex services are performed (BG-C13). Settlements in the domestic market seem to be conducted in cash directly between the trafficker, or trusted person, and the owner of the club/hotel where sexual services are provided (BG-C1, BG-C20). The high-end prostitution segment displays some subtle differences in the patterns of payment settlements. In many cases the pre-supposed exclusivity of sexual services performed by “models” and the parallel operation of the fashion agency as a cover business seem to keep a certain distance between the consumer and the sex worker, particularly in the financial flows. The contacts between the customers and the clients are usually handled by a central figure inside the agency—the so called “booker.” The booker also often receives the payment directly or through trusted members of the network from the client. Therefore, in such cases the women would perform a prearranged and pre-paid service without coming into contact with money. Exceptions seem to be the case, wherein established and known clients are concerned and wherein sex workers are paid directly by the client (BG-E6).

1.4.3 Costs of Doing Business Trafficking operations involve a variety of different costs at each stage of the process—recruitment, transportation and exploitation, wherein the last stage appears to be most cost demanding. Some of these costs are one-off and might be categorised as investment costs, whereas others are recurring and rather fall under the operational costs category. It should be noted that this classification is somewhat arbitrary, since the line between the two is blurred. The costs structure of trafficking operations varies depending on the modus operandi of the traffickers.

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Recruitment of new sex workers in most cases entails an investment of both financial resources and time. Independent traffickers, family-based organisations and loose networks often employ the so called “lover-boy” method or similar strategies involving deceit and manipulation. This method includes courting, befriending and manipulating the potential victim by the recruiter into a relationship of trust (BGC1, BG-C7, BG-C14). While traffickers often rationalise their actions as helping the women earn good money (BG-E11), different degrees of manipulation are involved. Aside from poverty, other vulnerability factors play an important role as well—dysfunctional family background, lack of experience with adult relationships, recent emotional trauma due to relationship break-ups, and periods of stay in orphanages or other institutions for disadvantaged young adults (BG-C1, BG-C2). In some instances, the process of trust-building may last up to nine or more months, thereby the lover-boy incurs sustained additional expenses (BG-C14). Very often recruiters identify and pick good looking women from poor backgrounds who can easily be impressed with a luxury lifestyle. The related costs in this sense include expenditures for restaurants, vacations, clothes and other gifts (BG-C1, BG-C7, BGC14). On the other hand, to take advantage of the lover-boy routine in recruitment, the recruiter may increase the chance for successful manipulation by displaying a luxurious lifestyle, which includes an expensive brand automobile, branded clothing and accessories, an expensive smart phone and well-maintained physique (BG-C10). Hierarchically structured organisations usually pay to specialised members of the organisation to perform these activities or pay to external actors on fee-forservice base. Persons in charge of recruitment receive a specific sum per new recruit and a bonus if she does well. The sums reported were between e100 and e250 and the bonus amounted at e500 (BG-C1, BG-C2, BG-C4). The money invested in recruitment activities are considered as running costs for the business and are covered out of the generated revenue (BG-C1, BG-C2, BG-C3, BG-C5, BG-C6, BG-C8, BG-C10). Still, in some cases, sex workers can be “acquired” without any direct financial cost—such as coercing or manipulating an independent prostitute to work for the network (BG-C1, BG-C2, BG-C4) or in cases where women seek out such employment themselves. A common expense that is closely related to the recruitment stage are the costs for make-over and personal care of the newly recruited victims. Collected data suggests that these sums range from around e500 to e1500, which is used for brand clothing, accessories, cosmetics and perfumery, among others (BG-C8, BG-C10, BG-C9, BG-C22, BG-C7). The sum varies, since it depends on the modus operandi of the traffickers. The outdoor segment is less demanding with regards to such expenses, whereas for the indoor and the high-end prostitution segments these expenses are integral. There are instances, wherein more expensive manipulations such as plastic surgery might be invested in for high-end sex workers (BG-C18). Transportation costs, both domestically and abroad, apparently play a minor role for the operations of Bulgarian traffickers, since Bulgarian citizens are entitled to a visa–free travel in the EU and the costs of intra-community travel have significantly decreased with the advent of low-cost flights. At the domestic market, if the provision of the sex service necessitates transportation to another location, it is

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either covered by the sex worker, or the procurer or is paid by the client on top of the price for the session. Procurers might enter into specific arrangements with taxi drivers or might provide transportation themselves (BG-C17, BG-E3, BG-E6, BGE10). Regarding the transportation costs in cross-border trafficking all interviewed respondents reported that these are usually covered by the traffickers. The most substantial costs sustained by the traffickers are related to the exploitation stage. These costs include lodging, expenditures for client acquisition, monitoring and control of sex workers, protection, concealment of criminal activities, corruption, and facilitation of money laundering. Client acquisition costs or in other words securing access to clients is one of the most significant costs for trafficking operations. Depending on the modus operandi these costs might include costs for acquiring access to a profitable location on the street, a window in a red light district or a place in a well-established adult club, brothel, and massage parlour. Online advertising costs and payments to taxi drivers, hotel porters or concierges for referring clients can also be generally put in this category. Profitable locations in hotels, motels and clubs abroad and in Bulgaria are often controlled by hierarchically structured groups and access to these for other trafficking actors is usually granted upon certain fee paid in advance (BG-C1, BG-C4, BG-C19, BG-C20, BG-E17). Even if the location is not controlled by some organised crime group, traffickers and pimps have to pay the hotels, motels and various hospitality businesses in order to use their facilities for sexual services undisturbed (BG-C15, BG-C17, BG-C4). In some arrangements the fee is flat and irrespective of the prostitute’s earnings (BG-C4), whereas in other cases, the hotel’s owner or manager receives a fixed fee (in one of the cases e5 per client) for each client brought in the hotel (BG-C17). Seasonal prostitution at hotels in resorts on the Black Sea coast seems to be characterised by strong competition, which drives prices up, while at the same time some hotel managers may require payment in advance for the prostitutes to work in a protected environment with access to clients. The fee for one prostitute to work in a Black Sea resort hotel may vary between e2500 and e3125 (or e125 per night for a beachfront hotel) per sex worker per month in advance (BG-C1, BGC3). The closer the hotel is to the beachfront, the higher the fee (BG-C3). The fee for working in adult clubs is around e1125 per sex worker per month (BG-C6). Different payment modalities exist, depending on the arrangement. In some cases, traffickers are required to pay a fixed fee upfront. This might be entry fee which is followed by a monthly or weekly payments (BG-C4). Alternatively, the lump sum covers stay for a certain amount of time—e.g. on seasonal basis (BG-C19, BG-E3). The amount differs depending mainly on the location and reputation of the establishment. Hotels and clubs in top Bulgarian summer resorts have been reported to cost e2000–e3750 per month (BG-C1, BG-C3, BG-C4, BG-C7). Smaller Bulgarian hotels or motels which provide terrain by the hour for the outdoor segment of the prostitution market might charge as little as e2.5–e5 per service (BG-C12, BG-C17). Securing access to profitable windows, brothels, massage parlours and similar establishments in the red light districts of western European cities, where prostitution

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is legal, also often entails payment of fees in advance. Some of the respondents indicated that in order to secure placement of a sex worker in such establishments traffickers have to pay a one-off fee of e2000–e3000 to an established broker who has been active in the business for a significant amount of time and possess the necessary social and business connections (BG-E17, BG-E6). Another option for traffickers is to rent apartments or houses where the women can work, wherein costs vary depending on the location. According to one of the respondents, an apartment in Cologne, close to the red light district, rented for several girls to provide sexual services may cost around e550 per month (BG-C6). This option is more prevalent in the indoor and high-end prostitution segments, and may be used in both domestic and cross-border trafficking (BG-E3, BG-C6, BG-E6). Finally, many trafficking organisations rely extensively on online advertising for solicitation of clients. Various websites, social platforms and online mobile applications are used to advertise the sex services. Online advertising may cost from nothing to a few euro per week, which is negligent compared to the fees for placement at brothels or similar sex venues. Thus, the sex worker can provide the sex services in any rented apartment, at the place of residence of the client or in any hotel. However, in high-end prostitution organisations, organisers may also invest in marketing their “models”, i.e. increase their popularity, hence marketability, through investing in professional photo sessions, magazine covers appearances, fashion shows, beauty pageants, among others (BG-E6). Other client acquisition costs may also include payments to external facilitators that refer clients. There is evidence that in a Bulgarian summer resort, a trafficking network would pay e15 per secured client to taxi drivers, hotel porters and casino workers (BG-E30). Monitoring, supervision and control of sex workers are the other type of costs associated with the exploitation stage, although they are not always easily quantifiable. These costs are primarily related to the strict accounting of the clients served and the due collection of the pre-agreed portion of earnings from the sex workers. In more coercive arrangements the tasks for monitoring and control also involve preventing the victim to run away or turn to the authorities. Depending on the complexity of the trafficking operation, these tasks may be performed by the traffickers themselves or by other trusted persons. Independent traffickers and members of loose networks often carry out these tasks by themselves (BG-C10, BG-C13, BG-C17), although in loose networks members could help each other from time to time (BGC13). In family-based organisations usually one of the family members is tasked with this (BG-C14). In other words, they do not directly incur financial costs for this, although they invest personal time. Hierarchically structured organisations usually have trusted persons that are managing the day-to-day schedule of the women, as well as the daily collection of the earnings. Use of such supervisors and money collectors also serves the purpose to conceal the direct link between the sex workers and the organisers of the trafficking operation. In Bulgaria the money that has been earned by the women is usually collected in cash daily by the persons in charge of protection and transportation of women (BG-C1, BG-C2, BG-C3, BG-C4, BG-C6, BG-C8, BG-C9, BG-C10, BG-C20). In

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the high-end prostitution segment, these tasks were carried out by the bookers, who are handling the contacts between the women and the customers (BG-E6). Different modus operandi is used by Bulgarian traffickers in western Europe, where this role is often assigned to some of the trusted sex workers (the so called “first girl”), the managers of the sex establishment where the victims are placed or the “madams” at the windows at red light districts in Belgium and the Netherlands (BG-C5, BG-C18, BG-C21, BG-C22, BG-C23, BG-E29). The amount of these costs remains somewhat unclear, although some of the respondents reported that the supervisors are paid a pre-agreed proportion from the earnings of the sex workers they look after (BG-E6, BG-C3, BG-C5). Closely related to monitoring and control are the costs for protection of sex workers. Independent traffickers and family-based groups personally take care of the safety of the women and their earnings from abusive clients and rival competition (BG-C17). However, especially in the outdoor segment they are often subjected to protection racket by larger organised crime groups specialised in the use of violence (BG-12, BG-C14) and one of the interviewed offenders reported that he pays about e8 per night (or e60–e65 monthly) for each of his six workers working on the street (BG-C17). Similarly, members in loose networks are responsible for the sex works they control but cooperate when they have to deal with rival competition. Rather rare are occasions, when they pay for protection to external persons (BG-C4). It should also be noted that, when traffickers pay for placement of their sex workers at brothels or other sex venues, the protection is included in the price or at least part of the pre-agreed arrangements. Hierarchically structured groups usually have members assigned with such tasks and, as mentioned above, they are often also responsible also for monitoring and control of women, money collection and transportation. Reportedly in such arrangements for every five to six sex workers there are two persons performing the day-to-day management, coordination, supervision and money collection (BG-C1, BG-C2). Most of the hierarchical groups also seem to retain within their ranks the so called “punitive brigades” that are part of the operating group and on the monthly payroll and are specialise in use of violence (BG-C7, BG-C10; BG-C18, BG-C19). Corruption costs also generally fall into the category of cost of protection. Different trafficking actors make use of corruption to different degrees, corresponding to their specific needs. Corruption payments become much more necessary in cases of incidents, complaints by family members and initiation of investigations by the police and judicial authorities. Such payments are made either directly or through the help of intermediaries. Typical targets of corruption are law enforcement officers and to a lesser extent judicial authorities (Bezlov et al. 2016). Many respondents reported regular extortion fees imposed by police officers to outdoor and indoor sex workers and their procurers in Bulgaria (BG-C12, BG-C15, BG-C16, BG-C17, BG-C19). Hierarchically structured groups sustaining more sophisticated trafficking operations incur additional costs related to the concealment of their activities from the authorities. In the high-end prostitution segment such costs may include investing in elaborate schemes of legitimate business structures—appointment of straw persons for owners and managers, registering front businesses such modelling or

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fashion agencies, and organizing model castings, fashion shows, advertising campaigns, among others (BG-E6). However, use of legitimate business structures is not limited to this segment. Criminal groups, which invest in and control adult clubs, massage parlours and similar establishments employ similar methods and register bogus companies with straw persons appearing as owners and managers. Women working in such adult clubs, hotels and other establishments have labour contracts as dancers, masseuses, office assistants or housekeepers (BG-C1, BG-C5, BG-C9). Using such legitimate companies as a front also entails a number of other costs typical for all normal legitimate businesses—office rents, accounting and legal services, utilities, staff salaries, etc. In recent years, trafficking networks that have established a foothold abroad also exhibit trends of attempting to use legitimate business structures through renting or investing in bars, clubs, restaurants and sex establishments in various western European cities (BG-E16, BG-17, BG-E19).

1.4.4 Profits and Profit Sharing As with the costs for doing business, the revenues from trafficking operations vary depending on the modus operandi of the traffickers and the market segment in which they operate. Prices for sex services fluctuate from one market segment to the other, as well as on the domestic prostitution market and abroad. Sex workers in the different market segments also tend to handle different number of customers. Furthermore, the profit sharing arrangements between the traffickers and the sex workers also vary depending on the modus operandi. The prices in the domestic market are significantly lower compared to the prices abroad. The sex workers in the domestic outdoor segment, which work on the street or bring their clients in low-end motels or hostels, charge between e7 and e15 depending on the service (BG-C12, BG-C17). Services in the indoor segment performed in clubs, hotels, rented apartments and private residences cost between e50 and e200. In summer and winter resorts the prices might go up to e200 per session. The highend prostitution segment, which includes women procured to rich clients by model agencies can range from e300 to e500 (BG-E6), depending on the length of sessions (e.g. 2–4 h, overnight stay or weekend). Abroad, the prices vary in the different countries (e.g. prices in Greece are lower than prices in Germany) and depending on the location (e.g. window prostitution vs. call girl services). The prices in the outdoor segment are e30–e50 per session depending on the type of services provided (BG-C7, BG-C23). The prices in the indoor segment fluctuate significantly—from e50-e100 per hour for low-end motels or hotels (BG-C1, BG-C4, BG-C11, BGC16, BG-C22) to e150–e400 for red light district windows, rented apartments and well-placed hotels (BG-E6, BG-C6, BG-C7, BG-C8). Prices of high-end sex workers abroad start from e400 up to e3000 but they also have longer engagements—e.g. over-night stay, weekend, etc. (BG-C9, BG-C18). Regular customers can receive discounts on sex services, usually about 5% (BG-C5, BG-C9).

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Sex workers in different market segments also handle different number of clients. Whereas a sex worker in the outdoor segment will handle 7–20 clients per day (BGC7, BG-C8), clients in the indoor segment are usually between two and six men per day (BG-C4, BG-C6, BG-C7, BG-C20). High-end escorts work with between one and six clients per week (BG-E6, BG-C9, BG-C18). The women usually work five-six days per week (BG-C16, BG-C19, BG-C23). The number of clients fluctuates from sex worker to sex worker but also depends on a number of other factors—location, day of the week, season; therefore, traffickers are constantly looking for more profitable locations or better performing sex workers. Nevertheless, according to the accounts of several interviewed traffickers operating in the indoor segment abroad, the average monthly revenue from a sex worker is in the range of e15,000–e45,000 (BG-E8, BG-C1, BG-C3, BG-C4, BG-C7, BG-C9). Revenue sharing arrangements differ depending on the type of the trafficking organisation and the modus operandi of the traffickers. Independent traffickers and family based groups more often tend to withhold all earnings from the sex workers under different pretexts—either because the trafficker and the victim have some kind of intimate relation and he pretends to look after the “family money,” or because the traffickers pretend to collect and safeguard the money on behalf of the victim until she returns to Bulgaria (BG-C14, BG-C15, BG-C21, BG-C22, BG-C23). In many of these cases deception, manipulation, coercion and even physical violence against the victim are also used by the traffickers. The procurer in this case will cover all costs of the trafficking operation from the earnings of the sex workers and keep the profit for himself. Hierarchical groups and loose networks as a rule employ less often coercive methods and pre-negotiate the split of the revenues with the sex workers. The interviewed respondents reported different proportions of earnings, which the sex workers are allowed to keep. The share of earnings remaining in the sex workers oscillated between 20 and 50%. Most respondents report that the traffickers are supposed to cover all related expenses from their share—acquisition of clients, protection and monitoring, transport and lodging. In general, gifts and tips received by the sex workers are usually kept by them (BG-C4, BG-C6, BG-C8). Sex workers who generate more revenue can also be rewarded with a bonus by the traffickers—either with an increase in the share of earnings they are allowed to keep (although this never goes above 50%), or other perks such as an extra holiday (BG-C9). In some of the hierarchically structured organisations, some of the key members of the group are also allowed to receive a share of the revenues generated by the sex workers. For example, in one of the cases involving a modelling agency used as a cover for prostitution, the person who handled the contacts between the women and the customers received 10% of all earnings (BG-E6). Another respondent reported that as a supervisor of six sex workers, he was receiving 20% of their earnings (BG-C3). Hierarchically structured organisations, which controlled brothels or other sex venues (especially such in a profitable location), follow a different arrangement for profit sharing. Instead of pre-agreeing on the split of the earnings, they demand a fixed advanced payment. For example, organisations controlling erotic clubs at Sunny Beach resort in Bulgaria demanded an advanced payment of e7500 per sex worker

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for three months during the summer season (BG-E3, BG-C20). Similar arrangements based on advanced payments ranging from e2500 to e7000 on a monthly basis were reported about hotels, adult clubs in other resort areas and abroad (BG-C1, BG-C2, BG-C3, BG-E6, BG-E17). The advanced payments supposedly cover their costs for renting the venue, providing protection against violent clients, rival groups and state authorities. The beneficial owners of such well-located adult clubs at the Bulgarian sea coast reportedly receive about e30,000 on a monthly basis in the form of rent (BG-E3). The enforcement of the revenue sharing arrangements are very strict and traffickers often impose tight daily accounting and control. For example, when the appointments with clients are made through the internet, the persons in charge of protection and revenue collection are granted access to the profiles of the women and sometimes communicate with the customers directly (BG-C1, BG-C2, BG-C3, BG-C5, BGC8). In other arrangements, sex workers have supervisors who closely account for their clients and earnings on a daily basis. Women who are caught trying to hide revenue are penalised with working for a certain amount of time without receiving any compensation (BG-C1, BG-C3, BG-C5, BG-C20). In rare cases they might be subject to physical violence, although it appears that this method is generally avoided, as well as the withholding of all earnings of the women. One trafficker, who used to be part of a larger network, notes: “There should be control but never through violence. I have always managed through conversations, good treatment and money, 50/50, always. If the girl wants, she can let you have all the money, but it is advisable to go 50/50” (BG-C10). The use of violence might prompt sex workers to go to the authorities (BG-C22). The methods for money laundering and the re-investment of proceeds from human trafficking are rarely sophisticated, especially in the case of independent traffickers and loose networks. Moreover, much of the money is spent on a lavish lifestyle or supporting a drug habit. Money is returned to the country and laundered through the purchase of designer clothing, electronics and automobiles, often of luxury brands (BG-E10, BG-E13, BG-E14). The traffickers operating in the outdoor and low-priced indoor segments of the prostitution market and more independent traffickers appear also to be drawn to use of simple trade-base money laundering such as purchasing and re-selling of easily tradable goods. These include mostly cars and gold, which are brought in and sold in Bulgaria (BG-C7, BG-C10, BG-C11, BG-C12, BG-C13, BG-C15). Other consumer goods, e.g. stolen electronics, are also bought cheaply and subsequently resold (BG-C7). Purchasing real estate and land in Bulgaria remains popular both for traffickers and sex workers, and most of the interviewed offenders and sex workers reported such. Traffickers who are part of more sophisticated organisations reportedly invest more often in various commercial establishments such as restaurants, small shops, hair salons (BG-C1, BG-C6, BG-C11). Investments into legitimate enterprises can serve a number of purposes—laundering of proceeds, providing a legitimate reason for residing abroad, recruitment of new sex workers—e.g. hair salons and massage parlours (BG-C1, BG-C10). Value transfers in the form of multiple donations and/or re-sales through a ring of dummy recipients are also reported to be employed in laun-

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dering proceeds from trafficking (BG-C10). Organisers in hierarchically structured groups, on the other hand, engage in developing more sophisticated and diversified legitimate business portfolios with multiple stakes in sectors such as hospitality, construction, agriculture, jewellery trade, fitness gyms, etc. (BG-C1, BG-C3, BG-C9). Construction works in and around popular winter and summer resorts as well as larger cities is a widely used method of laundering (BG-C6, BG-C16). Generally, most of the proceeds are invested and laundered in Bulgaria but a tendency to invest abroad is beginning to be discerned (BG-E5). Previous research showed that in the first half of the 2010s there had been many instances of investment in real estate in Greece, Cyprus, Spain, Italy, and Germany (Bezlov et al. 2016). There are strong indications of a positive relationship between the sophistication of an OCG and its propensity to invest in real estate and businesses abroad, both as cover and investment for trafficking sustainability and expansion. These may include bars, clubs, and cafes, used often for criminal social networking and/or provision of sexual services (BG-E5, BG-E6, BG-E7, BG-E17, BG-E19). Some experts opined that there is development of a similar trend among independent traffickers as well (BG-E8).

1.5 The Role and Impact of the Internet on Human Trafficking Activities and Its Finances The extensive penetration of internet-based services such as (anonymised) instant messaging and social networking websites has impacted on sex trafficking in Bulgaria and abroad in a variety of ways. First of all, online advertising has created opportunities to lower costs for client acquisition, since it reduced the competitive advantage of having access to established and profitable locations. Thus, especially in Sofia and abroad, it effectively contributed to the gradual disintegration of the existing cartelisation and control of the sex service market by organised crime and the increasing share of independent procurers and sex workers (CSD 2012). Furthermore, it also allowed expanding the pool of potential new recruits, since it provided a whole new bundle of opportunities to target and reach out to potential victims (CSD 2017). However, internet has also increased the risk for independent traffickers and sex workers, since they can be easily traced and eventually targeted by hierarchically structured groups, other rival competitors or law enforcement authorities. The latter is especially true for cities with relatively small prostitution markets (BG-C1, BG-C4, BG-C8). Data from the interviews suggests that the reliance on and use of the internet for sex trafficking, including recruiting and customer base development, is anchored in the interplay of assessments for trustworthiness, opportunism and caution of exposure. For example, whereas the internet may present countless opportunities for recruitment and clientele expansion it is void of the typical offline mechanisms for establishing trust. This is why, it is not surprising that both traffickers and sex workers

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among interviewed respondents exhibit diverse attitudes toward the online environment depending on subjective preferences and risk perceptions, as well as experiences with rival competitors and law enforcement encounters (BG-C10, BG-C13). Utilisation of online services such as dating sites, social media and specialised websites differs greatly among the respondents, whereby both extremes of the spectrum are involved, e.g. no use versus exclusive use. Apparently, for some operations the internet proves sufficiently valuable so as to expand the network by including external facilitators, such as IT experts, thereby ensuring that the traffickers are able to fully enjoy the benefits and minimise the risks of internet exposure. Internet services are primarily used for client acquisition and interviewed respondents provided a variety of examples how they are utilised. Many independent traffickers and sex workers rely on various online channels to market their services and solicit clients. One of the respondents reported extensive use of social networks to expand clientele, although new clients were usually accepted upon prior reference by already known clients (BG-C16). Data suggests that social media accounts (usually with fake names) are used for customer solicitation, whereby sex workers engage in maintaining flirtatious communication with their clients (BG-C16, BG-E10). At least one account shows that sex workers may organise themselves into Facebook groups, wherein sexual services are negotiated and arranged with customers within the social media service (BG-C17). There are also reports that Facebook pages are being created where girls advertise their legal front business, such as massage services (BG-C5, BG-E10). In online offering and negotiating of sexual services the details of the transaction are usually carried out through a conversation over Skype or anther medium which allows the customer to be seen and assessed for reliability (BG-C2, BG-C4). Organised trafficking and prostitution networks also tend to use the internet for client acquisition, as well as for sex worker supervision and control. Victims may be instructed to register accounts and profiles on online dating sites that are popular in the country where they work, such as Badoo, eLove Dates, Tinder (for western Europe) and Gepime, Elmaz, Adam and Eva (for Bulgaria) (BG-C8, BG-C2, BGC1). The accounts are controlled by the traffickers, whereby in some instances the organiser will hire an expert to deal with the technical details of account management, including for profiles in social media such as Facebook (BG-C8, BG-C6, BG-C1, BG-C5). Such experts are usually external to the network and are not involved on a full-time basis (BG-C5). The control and supervision activities include operating with the sex workers’ accounts, messaging on their behalf, instructions not to delete chat messages with clients, regular inspection of the contents of chats, among others (BG-C8, BG-C1, BG-C3). Thus, apart from everything, ICT technologies have also reduced costs for supervision and control. Hierarchical organisations, are also known to take advantage of internet to trace and recruit independent sex workers who use online dating sites to increase their exposure and popularity. The recruiters would regularly scan the known websites used for offering incognito sexual services and identify potential new recruits to be convinced to join the network. Once a victim is identified then the typical recruitment tactics of manipulation and coercion will ensue (BG-C1, BG-C4). Some of the

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interviewees were of the opinion that independent offering of sexual service through online dating and other sites is a short-term experience lasting up to several months. Then the independent sex worker is usually spotted by some local criminal group or network and they will instantly make efforts to recruit her/him (BG-C8, BG-C3). This is why, a large group of traffickers and sex workers are cautious about using the internet actively for their operations because of uncontrollable exposure to the public, including rival competitors and law enforcement, and the perceived benefits of their own proven offline business model. Therefore, many consider face-to-face arrangements and negotiations to be more trusted, safe and reliable than internetbased communications, and therefore avoid online activities as a part of their riskaversion strategy (BG-C10, BG-C12, BG-C13, BG-C14, BG-C15, BG-C21, BGC22, BG-C23).

1.6 Conclusion Human trafficking remains one of the most important sources of revenues for the Bulgarian organised crime. Although in the last decade the market has fragmented and decentralised, and the share of the independent traffickers and sex workers increased, it still remains largely controlled by organised crime. However, the modus operandi of all trafficking actors has shifted away from the violence and coercion towards the use of subtler methods involving economic incentives. The extensive penetration of the ICT and the steady growth of internet use have played an important role for these recent developments. Among other things, they have contributed to a significant reduction of client acquisition cost for trafficking operations. The current analysis examined in-depth the financial underpinnings of the human trafficking both at the domestic market and abroad. There is a widely shared belief that human trafficking is practically low-cost criminal activity bringing huge profits, wherein market entry does not require any particular investment. The collected information to a large degree refutes this common myth at least in the Bulgarian context. Certainly recruitment and transportation costs can be negligent to none, but the exploitation stage does require initial investment, especially if it is expected to generate sufficient revenue. A big competitive advantage of Bulgarian traffickers is that being EU citizens they can enjoy visa free travel and low-cost transportation. However, client acquisition costs can be substantial, particularly for access to high profitable locations such as placement in an adult club at the sea coast resorts. Internet does provide an alternative and can significantly lower costs for client acquisition, but on the other hand it raises risks related to encountering abusive clients or coming across with rival competitors or extortionists. Thus, it also increases cost for protection. Expanding business is also related to additional costs for monitoring and controlling a larger number of sex workers, as well as costs for concealment of criminal activities, for example through establishing legitimate businesses as a cover. Nevertheless, the collected data indicates that social capital can alleviate or

1.6 Conclusion

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significantly reduce many of these costs for new-starters or provide them with the needed credit line to enter the business. The extensive penetration of ICT services in prostitution markets have not changed much with regard to settlement of payments. Cash transactions still dominate trafficking business, whereas both payments from clients and within trafficking groups or networks remain in cash. The character of the money flows to a large extent predetermines the low sophistication of money laundering methods used by traffickers—money is moved across borders via non-bank money transfers and recently more often via money couriers. Subsequently the money is invested in real estate and cash-intensive businesses. Trade-based money laundering is also commonly used. The analysis also shows a newly emerged trend of criminal entrepreneurs investing their proceeds in the destination countries, especially in assets that allow them to expand their business—brothels or various hospitality businesses that are used as a cover for provision of sex services (e.g. restaurants, cafes, hotels, etc.).

References Bezlov, T., Yordanova, M., & Stoynova, N. (2016). Corruption and trafficking in women. The case of Bulgaria. Sofia: Center for the Study of Democracy. BKA. (2016). Trafficking in human beings. National situation report 2015. Wiesbaden. CSD. (2007). Organised crime in Bulgaria: Market and trends. Sofia: Center for the Study of Democracy. CSD. (2012). Serious and organised crime threat assessment 2010–2011. Sofia: Center for the Study of Democracy. CSD. (2017). Improving and sharing knowledge on the Internet role in the processes of human trafficking and smuggling. Sofia: Center for the Study of Democracy. CSD. (2018). Serious and organised crime threat assessment 2012–2017. Sofia: Center for the Study of Democracy. Ctoqev, C. (2016). Ppoctitycita v Blgapi: zaplaxi za qovexkata cigypnoct. Cofi: Inctityt za pegionalni i medynapodni izcledvani. Europol. (2016). Situation report. Trafficking in human beings in the EU. The Hague. GRETA. (2016). Report concerning the implementation of the council of Europe convention on action against trafficking in human beings by Bulgaria. Strasbourg. PPB. (2010). Doklad za ppilaganeto na zakona i denoctta na ppokypatypata i pazcledvawite opgani ppez 2009 g. PPB. (2013). Doklad za ppilaganeto na zakona i denoctta na ppokypatypata i pazcledvawite opgani ppez 2012 g. Cofi. PPB. (2017). Doklad za ppilaganeto na zakona i denoctta na ppokypatypata i pazcledvawite opgani ppez 2016 g. Cofi. PPB. (2018). Doklad za ppilaganeto na zakona i denoctta na ppokypatypata i pazcledvawite opgani ppez 2017 g. Cofi. Kleemans, E., & Van de Bunt, H. (1999). The social embeddedness of organised crime. Transnational Organized Crime, 5(January), 19–36. Nationaal Rapporteur. (2017). Slachtoffermonitor mensenhandel: 2012–2016. Den Haag. Pick Monitop. (2010). Ppoctityci i cekcyalna ekcploataci. Cofi. Petrunov, G. (2014). Human Trafficking in Eastern Europe: The case of Bulgaria. Annals of the American Academy of Political and Social Science, 653(1), 162–182.

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van Koppen, M. V. (2013). Involvement mechanisms for organized crime. Crime, Law and Social Change, 59(1), 1–20. Von Lampe, K., & Johansen, P. O. (2004). Organized crime and trust: On the conceptualization and empirical relevance of trust in the context of criminal networks. Global Crime, 6(2), 159–184.

Chapter 2

Human Trafficking and Its Financial Management in Italy

2.1 Introduction Italy represents a southern European criminal hub and a destination and transit country for migrants arriving from North and West Africa, Eastern Europe, the Balkans and China (Shelley 2014) with most of the individuals arriving from Libya. After the bilateral agreement between Libya and Italy in 2009 as to jointly prevent irregular migration, the collapse of Qaddafi regime in 2011 and the related security vacuum, migration flows through the Central Mediterranean route have increased (IT-E5; IT-E7; IT-E15). Recent data from IOM (2018a), report a total of 119,310 arrivals by sea to Italy in 2017 and a total of 181,436 in 2016. Some estimations on the number of migrants that are further trafficked in Italy are available; however, the covert nature of this criminal market and the lack of centralised database do not allow for updated and comprehensive estimations and monitoring (Eurostat 2015). Trafficking in human beings for sexual and labour exploitation in Italy is mainly managed by foreign OCGs. Although their modi operandi have been largely documented (Cabras 2015; Ministero dell’Interno 2015; Save the Children 2017; Mancuso 2013; Campana and Varese 2015; Baldoni 2011; Carchedi 2010; Curtol et al. 2004; Sagnet and Palmisano 2015; Leogrande 2016; Palmisano 2017; Scotto 2016; Iovino 2016), little is still known on how these groups raise and manage capitals to finance and sustain their trafficking operations. The present chapter provides an account of the financial management of trafficking in human beings in Italy.

2.2 Market Overview The prevalence of migrants arriving to Italy from Africa is due to the key role of the Central Mediterranean route. Data from FRONTEX (2017) underline that since 2014 the number of detections of illegal migrants crossing the Central Mediterranean Sea has exceeded 100,000. This is related to the persistent pressure of arrivals of migrants © The Author(s), under exclusive license to Springer Nature Switzerland AG 2019 G. A. Antonopoulos et al., Human Trafficking Finances, SpringerBriefs in Criminology, https://doi.org/10.1007/978-3-030-17809-3_2

27

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from Libya, which is the main departure country into Europe, and whose social and political instability has favoured both trafficking and smuggling of human beings (Wittenberg 2017). Notwithstanding this, FRONTEX (2018) reports a drop in the illegal border-crossings using the Central Mediterranean route between 2016 and 2017. If on one side the trend of an increasing number of irregular migrants detected at the EU borders has characterised 2016 and a part of 2017, on the other it is in July 2017 that “the numbers dropped suddenly and markedly to less than a half the level of June and July [2016] followed by an even larger fall to almost a third of that level in August [2017]” (FRONTEX 2018: 18). Consistently, data from IOM (2018b) reports a decrease in the number of arrivals of migrants to Europe from 2016 to 2017, with estimated numbers of 390,432 and 186,768, respectively. In particular, in the period between January and November 2018, Italy has registered a total of 23,011 migrants arriving by sea corresponding to an 80% drop compared to the same period in 2017 (117,042 arrivals). A decrease (88%) is registered also for arrivals from Libya, representing around 56% of all the departures of migrants reaching Italy. Other countries of departures were Tunisia, Turkey and to a lesser extent Algeria and Greece. According to the data provided by the Ministry of the Interior (MOI) for the same period, Tunisia is the first declared country of origin (5002 arrivals, 22% of the total) followed by Eritrea (14%), Iraq, Sudan and Pakistan (7%) and Nigeria (5%), (IOM 2018c). Several factors are responsible for this trend. Firstly, internal transformations in Libya that in the second part of 2017 prevented departures of irregular migrants. Secondly, more migrants from Tunisia and Algeria embark with boats from their home countries and reach Sicily and Sardinia in Italy. Thirdly, the Turkey-Italy maritime route that has remained available to smugglers (FRONTEX 2018). Although migration routes change over time as smugglers adapt to law enforcement counteraction and borders patrol, at present three main routes can be identified from Africa to Italy (major transit point) and then other European countries: (a) Western route for which the main source countries are Mali, Gambia and Senegal. This route usually connects in the Sahel with the Central route for which source countries are Nigeria, Ghana and Niger; (b) Central route, in which the country of major flow is Cameroon and that through Chad connects to the Western route in Niger (city of Madama) and further reaches Libya and the city of Sebha; (c) Eastern route for which source countries are mainly Somalia, Eritrea, Darfur in Sudan, and which usually cuts north through Sudan and Egypt and then along the coast of Africa (MEDU 2018; Reitano et al. 2014; Commissione Parlamentare di inchiesta sul fenomeno delle mafie e sulle altre associazioni criminali, anche straniere 2017) (Fig. 2.1). All these routes converge to Maghreb, and in most recent years in Libya. “In all the judicial cases, women and girls follow the sea route and cross almost the same stops. Here they are located in facilities, named differently ‘connection houses’ or ‘ghetto houses’, that are hell on earth. Warehouses for migrants where they suffer violence and deprivation” (IT-E24). For example, Amnesty International (2015) has reported that since 2013, abductions of Sub-Saharan migrants and refugees for ransom along the different trafficking routes in Libya have increased. Migrants are handed over or

2.2 Market Overview

29

Fig. 2.1 Migratory routes from Sub-Saharan countries to Europe. Source Authors’ elaboration on MSNBC (2018)

sold by traffickers to criminal groups upon crossing the border or arrival at major transit points, and then held like prisoners in private houses as well as subjected to torture and other ill-treatment for the purpose of extortion. These criminal groups are transnational and formed of nationals from Sub-Saharan African countries and Libyans. These abuses (e.g., being beaten, being subjected to electric shocks, insufficient food and water) have been documented in Sebha and its surroundings, as well as in transit points (e.g., Ajdabya, the main hub for migrants arriving from Somalia, Sudan, Eritrea and Ethiopia). The majority of Chinese migrants in Italy originate from Zhejiang and Fujian provinces in the South of China, followed by Liaoning and Shandong provinces (North of China). Migrations from the North part of China that has started in more recent years, have been boosted by the expansion of the Southern area as a result of money remittances of migrants abroad (Beretta et al. 2016). Trafficked migrants arrive to Italy through different sea, air and land routes: Eastern Europe route, crossing Romania, Hungary, Albania, the Czech Republic and the former Yugoslavia; Western Europe route, passing through Austria, France, Germany and Malta before reaching Italy. Other used routes are from Albania, via the Strait of Otranto, to the port of Brindisi; or from Northern China, via the Maritime (Primor’ye) Territory of Russia, as to reach the city of Moscow where they get/buy visas to enter to Italy (Eastwest.eu 2013). “I have seen different routes [for] China-Italy, passing through Turkey and Afghanistan, or other long land routes where illegal migrants were sold to different groups of traffickers” (IT-E2). In more recent times, “Asian and Indian

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2 Human Trafficking and Its Financial Management in Italy

migrants have started to migrate to North Africa overland by passing through the Sahara. They mostly fly from their home countries to African capitals sometimes [crossing] the Gulf Arab States. From there, they travel along common Saharan routes via Niger and Algeria to Tunisia and Libya, where they set sail to Italy” (Reitano et al. 2014: 13). As for Eastern European nationals (i.e., Albanians, Romanians, Ukrainians, Moldovans, Bulgarians, Polish) and given the role of Albanian and Romanian criminal entrepreneurs in trafficking in human beings, victims were transferred from Kosovo and Montenegro to Albania, and from there by sea route to Italy (arriving mainly to the region of Apulia). More recently, the sea route has been replaced by land travels along the Balkan route, entering Italy mainly through the passages that connect Slovenia with the region of Friuli-Venezia Giulia (Russo 2010; Ciconte 2016; Sagnet and Palmisano 2015). Among migrants of different nationalities that reach Italy, some estimations are available on the number of victims who are further trafficked for sexual and labour exploitation. Nevertheless, the lack of a centralised database and the collection of data on a yearly basis together with the absence of a uniform identification system render the quantification of victims and other related information (e.g. nationality, age, gender) as being not up-to-date and fragmented (GRETA 2016, 2019).1 The Department of Equal Opportunities (DEO) gathers some data on the victims that have entered assistance, protection and social integration programmes funded by the same Department.2 According to the last estimations available, in 2016 assisted victims totalled 1172, among which 81.4% were females (954), 17.6% were males (206), and 1.0% were transsexuals (12). The majority were adults (90.5%) ahead of 9.5% of underage victims. Most of the victims are exploited in the sex market (674 persons, 57.5%), but cases of forced labour were registered (92), forced criminality (37), forced begging (15), forced marriage (1), and multiple exploitation (72) (Department of Equal Opportunities 2018). In 2017, the number of assisted victims of trafficking was 1050 among which 85.6% were female and 11.5% were children. By the 16th of October 2018 (last data available) the number of assisted victims was 569, with 92.6% being females and 7.3% of children. Sexual exploitation counted for the highest percentage (90%), and in lower percentages labour exploitation (7%), forced begging (1.5%) and forced criminality (0.2%). In 2017 and 2018, the main countries of origins of trafficked victims were Nigeria, Romania, Morocco, Bangladesh, Pakistan, Albania and Bulgaria (GRETA 2019). 1 As

stated by GRETA (2019: 9), there is “a significant gap between the [estimations provided] of assisted victims and the real scale of […] human trafficking in Italy, due to difficulties in the detection and identification of victims […], problems of data collection, and insufficient attention to trafficking for purposes other than sexual exploitation, as well as to internal trafficking. The authorities acknowledge that mixed migration flows make it difficult to distinguish between migrants and those who are trafficked and/or in need of international protection”. 2 Through annual calls addressed to NGOs and non-profit organisations, the Department of Equal Opportunities grants funds for interventions of social protection under Art. 18 of Legislative Decree n. 286/1998 on “Consolidated text of provisions regulating migration and the rules relating the status of foreign nationals” and under Art. 13 of Law n. 228/09 on “Measures against trafficking in persons”.

2.2 Market Overview

31

The International Organization for Migration (IOM) also provides data on potential victims of trafficking, that are interviewed from operators in the places of first arrival (ports and other hotspots) on the basis of a set of relevant indicators (e.g., age and sex, nationality, psycho-physical condition, level of education, family background, travelling mode, etc.). In 2016, a total of 8277 potential victims were identified; this compares with 6599 ascertained trafficked victims. A small part of the latter has been signalled and referred to the competent police and judicial authorities as well as to protection programs (IOM 2017). There are recurrent reasons among migrants for leaving. The need for international protection or to escape from instability and violence, or living in poverty in the countries of origin. Thus, recruiters are facilitated by these factors. In Africa, for example, potential victims of very young age are approached in poor villages, and the same occurs in China and Eastern European countries such as Bulgaria, Romania, Albania, Ukraine, Poland, (IT-E7; IT-E22), (see IOM 2017; Politi and Fick 2015). In most cases, families play a crucial role during the recruitment stage (IT-E4; IT-E9; IT-E8; IT-E10): “A family mandate, with recruiters that may be friends or country fellows of both sexes, although women are more suitable for this role since [they are] dressed well, and [are] looking wealthier” (IT-E8). East European victims may be recruited by partners or presumed partners (i.e., the ‘lover boy’ method) as well. The major trend seems to be that recruiters lure potential victims with the promise of legitimate well-paid jobs such as, for example, as hairdressers, caretakers, dancers, waitresses (IT-E10), and this can also occur on the Internet and social media such as Facebook. The general scheme displays as follows: “the trafficker or the person linked to [OCGs] attract potential victims online. Among these [individuals] a virtual relationship is established based on dreams, false expectations and promises of a better future life; they plan weddings and travels and send presents or money to convince the [contacted person] to leave for Europe or Italy” (Di Nicola et al. 2017: 50). E-recruitment is usually linked to the organisation of travels and specific Facebook pages where complete packages of service are offered (i.e., job offers, travel options, and documents) with reference to travels to Europe and Italy. “Evidence from the investigation activity is the presence of Facebook profiles related to persons that offer travel arrangements and different options” (IT-E19). Consistently “our police officers… at ports have reported that some potential victims once arrived in Italy show to them the screenshot of a Facebook profile of the person that has organised their travel” (IT-E15). An interviewed expert has also pointed out that besides direct recruiting, pages of Facebook where women and girls post pictures portraying them in nice situations (i.e., well-dressed, holding mobile phones, and having fun) serve as an attractive factor for others to leave their country (IT-E24). While communications between recruiters and traffickers is mainly through the digital mobile app WhatsApp as to avoid interceptions, the latter may be used to receiving pictures of potential victims that were previously contacted on Facebook. This is similar to the use of mobiles or emails by recruiters to send pictures of potential victims to exploiters (IT-E20; IT-E24). As for recruitment aimed at labour exploitation, both online and offline channels are employed, which include pages with online job advertisements and employment agencies (Leogrande 2016).

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Migrants may travel with or without documents. In general, Nigerian victims who arrive by sea do not have passports, and once in Italy exploiters suggest to lodge asylum claims. “The more recent trend, compared to recover victims as soon as possible, is to leave them in shelter centres and wait for the resident permit to be issued. Thus, it is safer when they are on the streets” (IT-E24).3 Travels by plane are also reported (even if at present they are less frequent) to the European airports using fake documents, as well as reaching Italy by train (IT-E18; IT-E20). Similarly, Eastern Europeans (i.e., Albanians and Ukrainians), may be provided by traffickers with false documents, while the Chinese travel with touristic or study visas, obtained thanks to intermediaries in China. “An additional service offered, facilitated by a corruptive mechanism. Under payment it is possible to obtain the documents needed” (IT-E2). Another way, is through licensed tour operators which are granted blanket visas, and which seem to charge a fee for those that do not return after the expiration date. The trend seems to travel with genuine passports to depart the country, and then switch to forged or fraudulently obtained documentation (UNODC 2013). In Italy, documents are in most cases confiscated by exploiters, as to isolate the victims and make them more vulnerable (IT-E14; IT-E7), (see Leogrande 2016). In others, new fake documents are provided, as to be safe from police controls or to request resident permits. “When migrants arrive to Lampedusa, they are subsequently directed to a specific neighbour of the city of Naples where, according to our intelligence, has emerged a high concentration of forgers. It does not seem a coincidence” (IT-E10). The debt bondage, linked to travel and/or documents expenses as well as access to work, represents the main factor allowing traffickers to exploit victims within the sexual and labour markets in Italy, while using if necessary the treat of violent retaliation against family members if the victims are reluctant (IT-E2; IT-E10; IT-E14; IT-E21), (see Beretta et al. 2016; Eastwest.eu 2013; Commissione Parlamentare di inchiesta sul fenomeno delle mafie e sulle altre associazioni criminali, anche straniere 2017).

3 Most

migrants from Africa and travelling by sea are recovered in shelter centres, named “Centri di primo soccorso e accoglienza (CPSA)”, where they receive first aid and are identified by law enforcement. These centres are located respectively in the cities of Agrigento and Lampedusa (Sicily); Cagliari and Elmas (Sardinia); Lecce and Otranto (Apulia); Ragusa and Pozzallo (Sicily). If the condition of ‘asylum seeker’ is recognised, migrants can obtain the residence permit to stay in Italy. In practice, their request is evaluated by a territorial commission that can either accept or refuse. In many cases, requests are refused and migrants have the right to appeal. In the meantime, and until the final decision of the commission is reached, they can remain in the national territory (IT-E15; IT-E24).

2.3 Market Structure and Social Organisation of Trafficking Networks

33

2.3 Market Structure and Social Organisation of Trafficking Networks Foreign OCGs such as the Nigerians, Chinese and Eastern Europeans (i.e., Albanian, Romanian, Ukrainian, and Polish) are involved in the sexual and labour exploitative markets in Italy (DIA 2017; DNA 2017). Although settled throughout the country, it is possible to identify specific hubs for these two forms of exploitation: the cities of Turin, Milan in the North, Naples, Castel Volturno and Palermo in the South for sexual exploitation managed by Nigerian, Albanian and Romanian criminal entrepreneurs, and the province of Foggia with the area of Capitanata as a main point for labour exploitation in agriculture, especially for tomato harvesting (IT-E5; IT-E23; IT-E18), (see Scotto 2016). These criminal entrepreneurs share similar organisational characteristics. They are small in size (ranging from 3–4 to 10–15 members) and are based on family, ethnic and tribal bonds, while operating within large fluid networks of individuals/groups made up of nodes present in both countries of origin and exploitation. These nodes are also connected to traffickers/smugglers (in the form of joint ventures) in transit countries as to facilitate the movement of victims. Although roles and duties tend to be related to hierarchy, personal skills and the location of individuals, in most cases they are interchangeable (IT-E9; IT-E6; IT-E2; IT-E18), (see DNA 2017; Becucci 2016; Carchedi 2016). The “main feature of Chinese OCGs is that of guanxi, a term referred to a network of relationships among members on the basis of family bonds or commercial interests. These groups, that have mainly settled in the North and Centre of Italy, may create alliances to share duties and criminal markets, or may fight to control their territories” (Eastwest.eu 2013: 102). Albanian and Romanian criminal entrepreneurs are structured into family-based groups. The members come from the same city or town, and groups are connected with the bosses that reside in the countries of origin and/or other small groups (i.e., cells). The latter usually manage the first stage of trafficking, being involved in recruiting victims and in organising their travel, also procuring documents if needed. They may also be in charge of intimidating the families of reluctant victims. More often, Albanian and Romanian OGCs collaborate in exploiting victims in the sex market, with the former controlling prostitutes on the streets (Ciconte 2016; Carchedi and Tola 2005). As stated by Palmisano (2017), in regard to trafficking for sexual exploitation, Albanians have been able to establish a high level position compared to other foreign OCGs in the North part of Italy, and the same occurs for the placement of forced victims in the construction industry. Ukrainians are active in the region of Campania and the city of Naples, and are structured into small-medium criminal groups with strong connections with bosses and groups in the country of origin. These criminal entrepreneurs may be more or less organised, and in some criminal proceedings have been defined as “[mafia-type] associations, due to the systematic intimidations and retaliations for control purposes, illegal immigration and forced prostitution” (Ingrascì 2016).

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Nigerian Cults (named for example Black Axe, Eiye, Aye, Buccaneers, Vikings, Ku Klux Klan Fraternity), are small groups integrated within Nigerian OCGs.4 Dated back to the 1980s, their members settled first in the Northern and Southern regions such as Piedmont (city of Turin), Campania (cities of Naples and Castel Volturno), and Sicily (cities of Palermo and Catania). At present, “the power that these groups exercise in Italy is similar to that of Italian mafias. They manage drug trafficking, prostitution, and other criminal activities, and behave like our mafiosi in acquiring the control of local territories. In some criminal proceedings this characteristic has been recognised” (IT-E22; IT-E21), (see DNA 2017; DIA 2017). In particular, the Cults support the Maman in managing criminal activities, and protect these businesses from other native competitors. The Maman is usually a previously exploited woman able to marry an Italian man or to obtain the residence permit, and is the point of connection between the ‘bottom’ and ‘upper’ parts of Nigerian OCGs in regard to sexual exploitation, i.e., members/individuals that produce profits and invest revenues in the legal economy (IT-E5, IT-E6; IT-E7; IT-E21; IT-E24), (see Ciconte 2016; Carchedi 2016). The structure of Nigerian OCGs and the roles of members in regard to trafficking and sexual exploitation is described as follows: “Members in Nigeria are involved in the necessary stages to bring victims to Europe such as obtaining visas, hosting girls in accommodations while waiting for documents, managing voodoo rites (named juju) on girls to formalise the obligation to settle their debts, [and] arranging travels. The members active in Italy, cooperate to obtain and assure illegal entries of victims to Italy or Europe, to find Mamans that manage women and girls and their prostitution activity, to arrange accommodations, to gather profits and to intimidate victims” (IT-E20). Native organised crime groups (Cosa Nostra, the ‘Ndrangheta, Camorra, and Sacra Corona Unita) are not directly involved in sexual and labour exploitation at the national level. The reason is the negative trade-off between profits and risks, compared for example to drug trafficking (IT-E14; IT-E15). Foreign OCGs are thus more or less independent in managing these illicit businesses (IT-E1; IT-E15; IT-E18) (see Leogrande 2016). In the territories where Italian OCGs are present, they had to reach agreements also consisting in the exchange of illegal services or goods (DIA 2017). “If ten Polish men decide to be gangmasters in Cerignola [region of Apulia] they are not able to do anything without the support of local bosses. And if they have settled a human trafficking activity, they cannot avoid to have some relations with local organised crime groups” (Leogrande 2016: 89). In Campania and Calabria, for example, Albanian OCGs exchange drugs at a favourable price with the consent to use areas of the local territories for sexual exploitation (IT-E8), (see Russo 2010). Similarly, along the Apulian, Calabrian and Sicilian coasts, foreign OCGs supply native OCGs with drugs, weapons, and contraband tobacco products while the latter 4 From

Italian judicial cases on the trafficking of Nigerian women and girls, cults inspired by Evangelical-Christian and animist beliefs are active both in Nigeria and within Nigerian communities in Italy. These cults behave like criminal organisations and recruit members through a strict selective process. Their role is to support Nigerian OCGs in protecting businesses, recovering debts, and settling disputes. In few cases, their involvement in physical mutilations against competitors and ritual homicides has been detected in Italy (IT-E9; IT-E15) (see Carchedi 2016).

2.3 Market Structure and Social Organisation of Trafficking Networks

35

offer support in logistics for the disembarkment of clandestine migrants and control to prevent law enforcement counteraction. In other cases, Italian OCGs have received monetary payments for each disembarkment of migrants or for the use of prostitution areas (Spiezia 2008).

2.3.1 Sexual Exploitation: The Central Role of Female Criminal Entrepreneurs “In the Italian sex market, there are Romanians, Albanians, followed by Nigerians and Chinese” (IT-E10). When migrants (especially Nigerians) arrive in Italy, they have a mobile, also used by exploiters for remote control via global positioning system (GPS), and a telephone number to call to receive details as how to reach the final destination. Mobiles, in some cases, are also used to send bus or train tickets or if recharged to sell credits to other migrants and then pay for the journey. Potential victims, may be even picked up at shelter centres by members of OCGs or individuals recruited for this purpose (i.e., called ticket men), (IT-E4; IT-E8; IT-E21). “Compared to the first migration flows where victims arrived with numbers written on papers and hidden in their hair, nowadays it is more likely that they call families in Nigeria that, in turn, inform exploiters of their arrival in Italy. It is a countermeasure of traffickers due to police controls when victims disembark” (IT-E24). When victims start to be exploited, Nigerians work on the street and can be forced into prostitution at the very beginning inside or in the surroundings of open reception centres or temporary reception centres.5 Eastern European and Chinese victims work mainly in closed places—i.e., apartments/massage centres, and the former approach at first clients in the streets or via the Internet (IT-E2; IT-E14; IT-E19). “Exploiters buy telephone numbers connected in series that women and girls use to be contacted by clients, and that are linked to the offers of prostitution services posted on the Internet websites or social networks” (IT-E10). Common elements may be traced in the exploitation schemes applied by foreign OCGs. Firstly, the high level of internal trafficking or movement of victims. They are frequently moved from one city/town to another and usually work in places distant from where they live (IT-E20). “At nights or early in the morning, regional trains from the city of Rimini to the city of Bologna are full of Nigerian women that travel for working reasons” (IT-E10). Secondly, the use of violence to force victims, especially reluctant ones, into prostitution. Nigerians, in particular, benefit from the use the voodoo rites (also called juju) celebrated by local ‘holy men’ in Nigeria before the departure of the victims as a guarantee of the contracted debt (IT-E18). In extreme situations, Nigerian traffickers resort to violence (IT-E19; IT-E20). The violent approach and treatment is typical for Eastern European OCGs (especially Albanians), as means of psychological sub5 These

places are respectively “Centri di accoglienza per richiedenti asilo—CARA” and “Centri di accoglienza straordinaria—CAS”.

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2 Human Trafficking and Its Financial Management in Italy

mission of victims and to enforce their loyalty. Nevertheless, since the 2000s, these criminal entrepreneurs have lowered the use of violence as a strategy to curb their business risk (Baldoni 2011). “They are more contractual in leaving few hundred euros to the victims, and allowing more freedom in dressing and eating. During the ‘90s earnings for women and girls were equal to zero. More recently, a similar trend seems to involve Nigerian OCGs as well” (IT-E8). Due to the intimidating force of the voodoo rite, Nigerian victims are not directly controlled when working; on the contrary the Eastern Europeans are subjected to strict supervision by members or employees of OCGs (IT-E18). Thirdly, the central role of females in managing exploited victims, in most cases supported by their partners or other male/female assistants. The Nigerian Maman, who may also work as a prostitute (IT-E18; IT-E20), controls (i.e., demanding messages via mobile after each service) and organises trafficked victims, coordinates their activities and collects the income they make (IT-E19; IT-E24). Males (also partners) provide support through coercive and violent means when victims are reluctant or intend to emancipate (Baldoni 2011). In some cases, exploited victims live with the Maman, in others they are located in different apartments with other exploited women and girls, some of which may have legal residence permits as to be secured from police control (IT-E7; IT-E15; IT-E20). The Maman may be supported by male or female assistants and other members or recruited individuals, depending on the number of victims as shown in Table 2.1. A study carried out in the city of Asti [region of Piedmont] has underlined that 3 or 4 Maman are active, each exploiting from 4 to 6 victims, and receiving the support of female assistants (named Petit maman) with different roles. One Maman, in a medium-high level position, is in relation with a partner belonging to a Cult and in charge of intimidations and debt recovery (Carchedi 2016). Similarly, Chinese prostitution is managed by females (i.e., arranging appointments, collecting profits, distributing money, providing food and clothes for the victims) who can be supported by males (IT-E14), (Beretta et al. 2016). Concurrently, Albanian women, after years of prostitution and similarly to Nigerian ones, can control small groups of 3–4 victims, supported by partners or other male members of OCGs (IT-E3), (see Russo 2010).

Table 2.1 Numbers of victims and corresponding units of criminal entrepreneurs in a local context Victims

Maman

Partner

Handyman

1–3

x

4–6 7–10

Bodyguard

x

x

x

x

x

x

X

11–15

x

x

x

X

x

15+

x

x

x

X

x

Source Authors’ elaboration on Carchedi (2016)

Supervisor

Cashier

Courier— Transporter from/to Nigeria

x

x

2.3 Market Structure and Social Organisation of Trafficking Networks

37

2.3.2 Labour Exploitation: The Key Role of the Agricultural Sector The economic sectors of labour exploitation in Italy are the textile, construction, tourist and hotel industry, food service, and in particular agriculture (IT-E10; ITE11), (Shelley 2014; Palmisano 2017). The exploitation of Nigerians as drug sellers has been reported, together with other occupations such as parking attendants, window washers and beggars regarding other nationalities. Female victims from Eastern Europe (e.g., Bulgarians, Romanians) are exploited as caregivers (IT-E12; IT-E4; IT-E6), (see Bertolotti 2017; Save the Children 2017). Chinese migrants are mainly exploited in textile and clothing factories, or in restaurants, where employers may be either Chinese or Italians, who have transient relationships of reciprocal interest with traffickers. It is more likely that the owners of factories/companies (especially Chinese) know the criminal entrepreneurs involved in illegal immigration (i.e., named shetou) and rely on them to acquire labour force at low cost (IT-E2), (see Becucci 2016). The opposite may also occur. In one police investigation, the Chinese trafficker was in contact with two Italian representatives of a job placement cooperative, compliant in delivering fictitious contracts and fake paycheques (IT-E14). In other cases, there is no link between traffickers and employers, thus within the Chinese community, a recruitment service exists based on dedicated bars and newspapers, as for example in the city of Milan (Beretta et al. 2016). East Europeans and Sub-Saharan Africans are the main groups exploited in the agricultural sector, with the highest concentration in the province of Foggia (i.e., the area of Capitanata) in the region of Apulia (Sagnet and Palmisano 2015; Ciconte and Liberti 2016). Nevertheless, migrants are subjected to constant internal exploitation from North to South due to the specificity of harvesting seasons (IT-E11; IT-E16), (see Leogrande 2016). “By the end of winter they brought us to pick potatoes at Cassibile [in Sicily], then they told us we had to go to Apulia. It is four years that we make this travel. […] When we arrived to the city of Lecce, they brought us with a light van to an Algerian man, in the farmlands of the town of Nardò” (Sagnet and Palmisano 2015: 19–20). This form of exploitation involves also Italians, especially as a result of the economic crisis, while in regard to migrants it is difficult to clearly distinguish between trafficked and smuggled individuals. “It is hard to prove that the person employed in the tomato cultivation in Apulia is exploited as a consequence of trafficking. It is a multi-faceted situation. Migrants arrive through different illegal ways, and even if they have resident permits, they remain in a vulnerable situation. More likely, the discriminatory variable is the debt bondage. Slavery is the tip of the iceberg, under which there is just the exploitation of migrants” (IT-E11). Both foreign and native OCGs benefit from what can be defined a “criminal system” in which legal and illegal entrepreneurs operate based on the ancient Italian labour method of gangmasters, that at present is functional to respond to and profit from the dynamics of the modern food industry (IT-E11; IT-E17), (see Scotto 2016).6 6 The

fact that farmers have to keep very low production costs depend on the dynamics of the globalised food market where their power to negotiate prices with industries that process their

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Foreign OCGs may recruit individuals with the promise of a legal job, arrange their travel and their further employment in agriculture in slavery conditions, as in the case of Polish or Romanian OCGs (Iovino 2016; Leogrande 2016). For example, in the police operation “Piana” (from the location of farmlands, Piana del Sele), carried out in the province of Salerno, a transnational criminal organisation comprising of Romanians and Italians was dismantled after lawsuits from some of the Romanian victims. The offenders were accused of having trafficked women between Romania and Italy for the purpose of labour exploitation in agriculture. Victims were cheated with false promises of good, profitable legitimate employments and then forced to work in local farms, where they were underpaid and threatened. The criminal activities perpetrated by this group were: illegal intermediation with employers, subtraction of contracts, collection of payments (at higher prices) for accommodation and transportation, money extortion for residence permits and deductions from salaries (Iovino 2016). Italian OCGs, where rooted (i.e., South of Italy, and the regions of Sicily, Calabria, Apulia and Campania), make profits thanks to the control of some areas where labour exploitation takes place (IT-E16). “In certain places, villages, gangmasters and farmers have to keep good neighbourly relations with local OCGs. This may consist in protection money and extortions” (IT-E11) or exchanges in other criminal activities, such as drug selling. For example, in one investigative operation named “Svevia” of 2000, local OCGs active in the province of Foggia, were interested in the tomato supply, and in perpetrating money extortions to farmers of around 1000 euros for each load leaving the farm (Leogrande 2016). Gangmasters connect demand and supply, and offer their service to farmers, thus overcoming legal ways of recruitment. “In most cases, these persons are the only point of reference for the job searching of migrants devoid of the possibility to contact employers, and their role is crucial in less populated areas. […]. More often, they have worked for a long time in the territory and know employment mechanisms. Their activity is usually subjected to an Italian gangmaster who, in turn, is recruited by unscrupulous farmers. Differently from the past, these actors manage not only the recruitment of workers but also all aspects of their lives (i.e., hours of working, salaries)” (Pisacane 2016: 44–45). Gangmasters operate within a criminal network. On one side they are linked to intermediaries (i.e., recruiters and travel organisers) in the countries of origin of migrants, and on the other they are in constant relation with other gangmasters and intermediaries operating in the same region or areas of Italy. One judicial investigation concerning the interceptions of two Polish gangmasters revealed connections with others collaborating for the placement of workers, and deciding the farmlands where to employ them. Some of the gangmasters charged in the trial were also involved in smuggling of solar panels, and were trying to set up operations of weapon trafficking. Another gangmaster, for example, was connected rough products is almost inexistent (IT-E11; IT-E16; IT-E23). As stated by one previous victim of labour exploitation (IT-E23) “In my opinion, the real gangmasters are food corporations that, through a mechanism of lowering costs, force farmers to resort to gangmasters to have labour force at a very low price to resist on the market”. Another reason for the use of gangmaster to hire day labourers is related to the cycles and timing of harvesting. In many cases, farmers need labour force in very short times (Ciconte and Liberti 2016).

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to a friend receiving girls who wanted to work as prostitutes and paying 2500 euros for each (Leogrande 2016). Thus, as stated by an interviewed expert and as it results from investigative evidence (IT-E10) (see DIA 2017), the presence of native OCGs in the agricultural sector, known as agromafia (i.e., agricultural mafia) may favour this form of illegal employment and exploitation, and the profiting from this “criminal system”, but there is not direct involvement. The lucrative business of Italian organised crime groups is to infiltrate and/or acquire legal farms, especially facing economic difficulties, in order to infiltrate or control the supply chain, such as for example imposing the purchase of specific commodities, and easily launder revenues of other criminal activities (IT-E10; IT-E11), (see Europol 2015). Besides the very unhealthy and unsafe living and working conditions of migrants related to the higher number of working hours per day (from 12 to 14); the threats of gangmasters if they are reluctant to work; their staying in overcrowded and crumbling facilities; the neglected right to receive medical aid if needed, the majority of migrants also have their documents withheld by gangmasters. “Seize of passports, residence permits and IDs. The declared reason is to make employment contracts, the real one is to keep us under their control. Sometimes, our documents are sold to clandestine migrants” (Sagnet and Palmisano 2015: 29). In other cases employment contracts are absent or fictitious, or migrants are employed on piecework (IT-E15; IT-E23), (see Pisacane 2016; Iovino 2016; Leogrande 2016; MSF 2008). As contended by one expert, this option is paradoxically preferred since it allows to earn more money being paid for each filled up chest (of tomatoes, for example), (IT-E16). In general, exploiters prefer to employ foreign women since they complain less and accept lower salaries, 22 euros in front of 37 euros. A hierarchy also exists for retributions in which Caucasian workers perceive higher payments compared to African workers (Sagnet and Palmisano 2015). As stated by an interviewed victim of previous labour exploitation: “It is hard to fight back this system. The daily threats we suffered, perpetrated by gangmasters and farmers. When the trial ended, the sentences documented the State complicity with, for example, labour inspectors informing farmers about the day of inspection” (IT-E23).

2.4 Financing and Financial Management As for the financial management of trafficking in human beings, the main data gathered was for Nigerian OCGs for two main reasons: nowadays in Italy they represent the most emerging criminal entrepreneurs involved in this criminal activity; the high numbers of Nigerian victims reaching the country and further exploited into prostitution, some of whom decide to collaborate with police forces and judicial institutions to escape their situation. East European OCGs have a long history in terms of sexual exploitation and are not the main and recent focus of criminal investigations. Chinese OCGs, even if investigated, are an insular ethnic group, thus allowing for more limited information to be gathered, mainly by undercover police activity.

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2.4.1 Sources of Capital for Initiating/Sustaining Operations of Trafficking in Human Beings and Profiles of Financiers Although Nigerian OCGs are active in the drug and sex markets, it appears that the source of financing for the trafficking operations may come from the same criminal activity or other illegal activities. As a matter of fact, the distinction is blurred when transnational OCGs are involved, and this can be true also for Eastern European criminal entrepreneurs, such as for example Albanians that operate in drug trafficking and sexual exploitation (IT-E4; IT-E10; IT-E18). Nevertheless, as underlined by one expert, Albanian OCGs when settled in Italy have started to gain profits through prostitution, and then reinvested them into drugs to be sold to Italian OCGs at a very favourable price, which allowed them to gradually ascend the hierarchical structure of this criminal market (IT-E8). Social capital more than financial capital is crucial as to recruit potential victims in the countries of origin (IT-E4). For example, Chinese clans (i.e., extended families) are actively involved in identifying nationals that can be moved and further exploited abroad (IT-E2). In most cases, some clan members are the financiers of the trafficking operations: “None of these Chinese migrants could leave without paying any money. It was a real extortion of OCGs against family clans that were obliged to turn to loan sharks as to pay the travel. A real form of getting into debts, but not with traffickers” (IT-E14). Similarly, family members and relatives play a key role in recruiting Nigerian potential victims. Community relations in rural villages and other individuals in contact with the Maman acting as intermediaries (e.g., friends, acquaintances, priests, etc.) facilitate the process (IT-E25). As for the financiers, there are different situations: (a) the Maman pays the travel and documents (if needed) in advance; (b) sponsors (i.e., persons close to the families of potential victims) that offer to cover the required expenses; (c) families or relatives that anticipate the requested money, usually getting into debts or selling their properties, and that wait to be repaid with the earnings of the victims once they have started to work in Italy (IT-E15; IT-E18; IT-E19; IT-E20; IT-E22), (see Di Nicola and Musumeci 2014). In some cases, the amount to be repaid back (i.e., the debt of the victims) is known in advance by the families and this allows to negotiate with recruiters “in one judicial case, all the trafficked girls had to repay an amount of 30,000 euros, except for one girl for whom the family was able to agree an amount of 25,000 euros” (IT-E4). In Libya, other required payments are needed on the side of Nigerian OCGs which have to leave the victims to other local criminal/military groups, since at present they cannot count on previous corruptive networks. Stories of women refer of the trade between Nigerian criminal entrepreneurs and Arab gangs. Victims are kept into connection or ghetto houses until the Maman in Italy pays this additional amount for their liberation (IT-E4; IT-E21). If she has no money when requested, victims can be bought by other Mamans even in Libya. “There are ladies that go to these connection houses to buy women and girls, with the interest of profiting and making them reaching another location or country” (IT-E4). The financiers

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in this occasion may also be family members or relatives, to whom more money is extorted (IT-E21). Similarly, Chinese victims are sold during their journey to Italy, even more than once, either to other members of the same OCGs, or to other criminal groups (IT-E2; IT-E14). This way, it is possible to earn more money, or to share with other criminal entrepreneurs the profits of trafficking. “In the judicial cases handled, involving very long land routes, groups of around thirty Chinese migrants were sold several times to various criminal groups that managed different paths of the travel and that were in contact with each other” (IT-E2). Simulated kidnapping may occur as well, and perpetrated by members of the same OCGs. This way, the anticipated amount of money is not considered, and additional money is extorted from the families or relatives of the victims (IT-E14). On the contrary, when Eastern European OCGs are involved, the recurrent scheme is the payment in advance for the travel, visas and documents (e.g., Albanians), since usually the agreement with the victims is that this amount will be repaid once starting to work in Italy (IT-E4).

2.4.2 Settlement of Payments In general, migrants cannot leave if payments for travel and documents (when needed) are not delivered to the persons (i.e., member of OCGs, intermediaries, relatives, and acquaintances) in charge of the recruitment and arrangement of the journey, residing in the countries of origin (IT-E15). The most used way to settle payments are pre-agreed instalments, that is an initial sum of money to cover initial travel and documents expenses, and another sum of money once the victims start to work in Italy and to repay their debt. For example, in one judicial case on a Nigerian organised crime group, “the woman (Maman) asks to [her contact] how much money is needed for the girl to arrive to Italy. The contact explains the procedure and the payment: first he will have to deposit a half of the amount to his trustee in Nigeria, and the other half when the girl will reach Italy” (IT-E20). In another investigative operation regarding Chinese migrants, instalments were paid in three stages: “The agreed settlement of payment was 1/3 of the total amount before the departure, another 1/3 once arrived to Italy, and a final 1/3 through working (i.e., labour exploitation)” (IT-E14). In some cases, it also occurs that all the amount of money requested is anticipated by sponsors or family members as well as relatives before potential victims leave their country of origin (IT-E7). The agreement is then to repay once victims are employed in Italy. Sponsors, which can be also intermediaries of OCGs will be repaid by the latter or in a later moment when victims start to work (IT-E7; IT-E8). On the contrary, family members or relatives run the risk not to be repaid back. The reason is that victims are not able, in most situations, to send money to their home country because of the debt and the obligation to leave almost all the earnings to their exploiters (IT-E2; IT-E4; IT-E15; IT-E25). In the case of Nigerians, for example, the profits of victims and the possibility to send money to their families depend on their settlement in Europe and their subsequent career as Mamans (IT-E20).

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Besides the use of cash smuggling, which is always preferred since it is less risky, when OCGs anticipate the expenses of the travel and of eventual documents for migrants, there are four main methods used to send the money to the contact person in charge of organising the journey in the country of departure (IT-E10; IT-E12; IT-E15; IT-E18; IT-E19; IT-E24): 1. Hawala (i.e., underground banking) which regards in particular North-Africans and Muslim populations and represents “cash-in and cash-out businesses that primarily send personal remittances of low value, and that do not preclude sending high value business transfer” (FATF 2013:15)7 . Besides the separated physical transportation of money, payments are made through the use of papers with codes among trusted hawaladars (IT-E6; IT-E20). 2. Money transfer services (e.g., MoneyGram, Western Union, WorldRemit), especially with reference to Nigerian criminal entrepreneurs: “in some investigations, it was evident that [the latter] hold ethnic or money transfer shops used as a cover for illicit money flows” (IT-E12). The owners can be members of OCGs or accomplices that may borrow their ID documents or may use other customers’ identity cards as to hide the number of operations per day. 3. Postepay service, which consists in a rechargeable credit card allowing to transfer money. 4. Bank accounts, where the transfer of money is delivered to bank accounts of ‘strawmen’, who can be family members/relatives/acquaintances or individuals connected to members of OCGs. When trafficking involves migrants from Africa, and particularly from Nigeria, the same methods of settlement of payments are used in two other circumstances. Firstly, if more money is needed in Libya for victims to cross the Mediterranean Sea. “The person in Nigeria appoints the smuggler for transportation and incurs a debt. It is not clear if the former sends the money from Nigeria, or if he pays through a contact in Libya. But the methods are Hawala or money transfer services” (IT-E20). Second, when victims are kidnapped by or sold to other criminal/military groups in Libya. For example, in one judicial case, while migrants were kept prisoners in one camp in Sebha, there were persistent requests to their families to credit sums of money for their liberation through MoneyGram, Western Union or on bank accounts headed by family members (IT-E21). Unless the victims or recruiters hold a direct contact with traffickers and/or smugglers, and payments are mostly handled in cash, in all the other cases the aforementioned methods are applied. Consistently, the latter are used when paying individuals involved at the various stages and with different roles within the trafficking chain, as it occurs for example with the trolley man or boga (i.e., the person accompanying the victims from Nigeria to Libya) and the ticket man (i.e., the person in charge of recovering victims in Italy), (IT-E21; IT-E24). 7 This

type of service has been defined by the Financial Action Task Force—FATF (2013: 15) “criminal Hawala, [a system] driven by illegitimate money flows and often controlled by criminals or criminal groups […]. These criminal networks are characterised by high value transactions between legal and natural persons that do not necessarily share the same cultural/geographic background”.

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2.4.3 Costs of Doing Business Costs of trafficking are mainly related to travel and/or documents expenses when OCGs are the financiers both from the country of origin and through Italy to reach the final destination, and the result is not particularly high if compared to other criminal activities such as for example drug trafficking (IT-E8; IT-E15; IT-E20). In general, costs depend on the distance between the countries of origin and destination of victims, and the method (i.e., transportation) arranged for travelling (IT-E18). As reported in one judicial case on a Nigerian organised crime group, there are two ways of trafficking which are in turn related to different prices (IT-E20). The first option, which regards travelling by plane, is the safest but most expensive option since it includes the costs of the ticket, documents and corruption in the countries of origin/transit. The second, concerning the arrival to Italy by sea (crossing the desert of Niger and leaving from Libya on boats) is the cheapest, although riskier. Differences in costs of travelling encountered by traffickers reflect in diverse amounts of the debt of victims (e.g., around 50,000 euros if they arrive to Italy by plane and around 30,000 euros if they travel by land and then sea). For victims arriving from Nigeria to Italy through the most frequent land and sea routes used by traffickers (i.e., from Benin City, crossing the desert of Niger to reach Libya and then Italy) that are subsequently exploited in the sex market, the cost of the travel ranges between 2500/3000 and 5000 euros (IT-E4; IT-E7; IT-E9; IT-E10). This amount pays the travel and the persons in charge of transportation, i.e., passeurs (ITE12). It has been contended by one expert that when the amount is around 5000 euros, a part of this amount is supposed to pay the ransom requested by other groups operating in Libya that keep migrants hostages in connection or in ghetto houses (IT-E4). In some cases, additional money is required to OCGs, a sum that can range from 200 to 500 euros, as to allow victims to continue their travel to Italy (IT-E4; IT-E21). The total amount of costs for having the victims arriving to Italy can be also higher. In one case, the initial price paid by the Maman to her contact (i.e., partner) in Nigeria is 4000 euros, although the cost of the operation amounts to a total of 11,000: “He explains that the money is needed for the business, and that she does not have to complain since the total amount [11,000 euros] corresponds to a favourable price. He also says that he will add to the 4,000 euros another 2,000 euros for extra expenses” (IT-E20). A similar price for trafficking a girl from Nigeria to Italy and the city of Genoa, is reported in another judicial case, where the total amount to pay all the persons involved in her illegal entry is around 12,000 euros (IT-E20). On the contrary, other judicial evidence refers less total costs for the journey (i.e., travel, transportation, intermediate stage) which are between 500 and 800 euros (IT-E24). As for Nigerian criminal entrepreneurs, other costs are related to the voodoo rites before victims leave their country of origin: in one judicial case the price paid by the contact of the Maman in Nigeria is 500 euros, while from another source of information the price is 150 euros with the obligation for the victims to give another sum of money once they employed in Italy and start to repay their debt (IT-E25).

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Once Nigerian victims reach Italy, there are other costs to be sustained by OCGs. Firstly, the travel to the final destination. For example, in one case the price is around 300 euros (IT-E8), although the presence of different options and routes at the national level make this estimation particularly challenging. When victims are recovered at the points of arrival (i.e., shelter centres) by a member or employee of Nigerian OCGs or the Maman, this person is paid around 50 euros for each travel. Second, the management of the prostitution activity such as paying the person in charge of accompanying/controlling victims on a daily basis while working (that can be Italian as well), who receive between 25 and 50 euros per day; renting of joints (i.e., open air spots located in the streets for prostitution) which cost around 50–150 euros per month and are paid to the owners that are usually other criminal entrepreneurs, e.g., Albanian OCGs (IT-E4; IT-E24). Other costs are related to the laundering of profits, and in particular to services that allow to transfer money to the countries of origin. As for Nigerians, the commission charged by the owners of money transfer services is around 1%. There are some OCGs that while using cash transportation for their profits, offer the same service to other traffickers: “The organisation charges 6% of the transported amount that includes the delivery and concealment of money, transportation and air ticket, and final consignment. And this is also used for licit money, since preferred to money transfer services where movements can be traced” (IT-E6). Usually, this service may occur within the Hawala system (Table 2.2). In trafficking of human beings for labour exploitation with regard to African, Chinese and East European migrants, the costs related to the travel, the intermediation of recruitment agencies or persons in charge of providing documents and visas (both for the journey if needed, and to remain in Italy) are in general covered by the victims

Table 2.2 Indicative costs incurred by Nigerian OCG for a trafficking operation (sexual exploitation) Type of cost

(e)

Travel from Nigeria to Italy (by land and by sea from Libya)

2500/3000–5000

Travel from Libya to Sicily (by sea)

600–1800

Voodoo rite

150–500

Ransom to criminal groups in Libya

200–500

Passeur

220–330

Travel in Italy (point of arrival to destination)

300

Ticket man

50

Accompanist/controller of girls to/at joints

25–50 euros (per day)

Renting of joints

50–150 euros (per month)

Owner of money transfer service

1–2% of the sum transferred

Money courier

6% of the sum transported

Source Authors’ elaboration on gathered data, Zandonini (2017) and Commissione Parlamentare di inchiesta sul fenomeno delle mafie e sulle altre associazioni criminali, anche straniere (2017)

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and no costs are sustained by criminal entrepreneurs (IT-E2; IT-E14), (see Leogrande 2016; Palmisano 2017; Sagnet and Palmisano 2015). In one case, for example, Polish migrants have paid to the recruiter or the driver of the bus a total of 200 euros, plus another sum of around 50–100 euros to other intermediaries. One Polish victim, in particular, is said to have paid 200 euros to the recruiter and other 120 euros to the driver, and then he was able to leave for Italy. In another case, a Polish man directed to the city of Foggia (region of Apulia) reports to have paid 150 euros to traffickers, 50 euros to an intermediary as to pass the last border and other 50 euros after the first week of work (see Leogrande 2016). Consistently, a Tunisian young boy had to pay 2,000 euros to an intermediary to obtain the residence permit to stay and work in Italy (Sagnet and Palmisano 2015). The actual costs are on the side of exploited victims, while profits are gained by gangmasters by reducing the final amount of salaries. In the agricultural sector, for example, the amount of wages for workers is set between the gangmasters and the farmers. While the former makes profits from detracting a part of the daily earnings of workers, and charging other costs to them (e.g., transportation, food, etc.), the latter is able to make profits due to the very low cost sustained for production. For example, drivers who bring migrants to the farmlands on a daily basis are paid 600 euros per month by gangmasters, but this cost, as explained below, is actually paid by exploited victims (Palmisano 2017; Sagnet and Palmisano 2015).

2.4.4 Profits, Spending and Money Laundering As pointed out by Europol (2015) exact and overall estimations of profits from trafficking in human beings is challenging, and when available are unreliable. This is valid also when estimating profits of trafficking and exploitation at the national level. It is then possible to give indicative ideas of profits mainly referred to specific cases. In general, the debt incurred by the victims represents the main source of profits for OCGs. For example, the total amount of the debt for Nigerian women and girls can range between 30,000/40,000 and 50,000/60,000 euros, while for Chinese victims exploited in the sexual and labour markets is 15,000/20,000 euros (IT-E6; IT-E8; IT-E9; IT-E14; IT-E20; IT-E21) (see Di Nicola and Musumeci 2014). The requested sum of money is set arbitrarily since it does not correspond to the costs sustained for travelling, eventual documents and access to work. Nigerian OCGs may make profits by selling trafficked victims among Mamans, as documented by one judicial case in which one girl, once arrived in Italy, was sold to another exploiter for a price of 8000 euros (IT-E20). When the debt is repaid back, and in most cases within many years, the victims are free from their exploitative situation. When Nigerian women and girls are involved, it is more likely that they become Mamans and carry out the trafficking and exploitation activities using contacts previously developed. The constant arrival and employment of victims is essential for OCGs to continue making profits. As for sexual exploitation, victims are forced to deliver daily earnings to their exploiters until the sum of the debt is repaid. Usually, they are supposed to earn a

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certain amount per day which can be around 100–300 euros for Nigerians and Eastern Europeans. The possibility to earn a certain amount per day is related to the ethnicity, the physical appearance and the place of working—i.e., joint (IT-E6). The sex market is highly competitive and victims, pushed to generate profits due to the debt and intimidations, can even work for very low tariffs (IT-E8; IT-E9; IT-E20). Nigerian prostitutes work for around 30 euros per service, but also for less money (around 10–15 euros). On the contrary, East European victims (Albanian and Romanian) can ask for higher tariffs, around 30-50 euros. In general, they are more good looking, they work in central areas and may have apartments where to bring clients (IT-E8; IT-E12). Reaching the daily requested amount, particularly for Nigerians, means in practice working 10–12 h a day (IT-E2; IT-E6; IT-E8; IT-E20; IT-E21). The amount of the debt for OCGs is almost a net profit due to the fact that victims have to cover the rent of houses/apartments, food and clothes expenses (IT-E8). For example, in one case (IT-E20), an exploited girl was supposed to pay 250 euros for the monthly rent plus 40 euros per week for the food. If on one side Albanian criminal entrepreneurs have adopted a more contractual approach and leave the 30–50% of the earnings to the victims, on the other Nigerians keep all of the generated income (IT-E10). As a result, exploited women and girls are able to repay their families (if they are the financiers) or to support them, once free and usually when they become Mamans and start to exploit other victims. For this reason, when possible, victims try to conceal a little part of their earnings and send them to their families (IT-E8). Similarly, Chinese women and girls exploited in massage centres or apartments are forced to leave all of the earnings to the owner/boss (usually a woman) until they have repaid their debt, and receive a small part of money to cover their living expenses (IT-E14). Within Nigerian OCGs, the money collector is the Maman, that keeps tracks of revenues and expenditures on papers or notebooks, and within the Chinese it is still a woman in charge of exploiting the girls and keeping their profits (IT-E14). In particular, the Maman is responsible to distribute profits to her partner or husband and to pay the other individuals that support her in managing the prostitution activity: “the girl was used to deliver the money to this lady that, in turn, every week sent the profits to Nigeria minus the costs to pay her husband and for living expenses” (IT-E4). It is supposed that a part of the profits is also divided with the higher level of OCGs, which involves other male members residing in Italy and other European countries (IT-E9; IT-E15). The scheme that generates profits in labour exploitation is somehow different, and besides traffickers, there are other legal or illegal actors that make revenues within a grey economy. The first source of profiting for OCGs regards travel and document expenses that are covered by migrants. The latter usually pay the recruitment agencies in the country of origin and, in some cases, in Italy. Available examples are related to different economic sectors: 200 euros each month are remitted by a caregiver employed in Italy; 700 euros a year are paid by a waitress working in a Hotel on the Italian coast, 200 euros to a Polish recruiter to work in agriculture (Palmisano 2017). In the agricultural sector, while farmers profit from employing labour force at low cost (and this is valid also for processing companies and corporations within an ‘adulterated’ production system), illegal profits from labour exploitation are mainly

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47

made by gangmasters, employers (when recruitment agencies are involved), and the owners of the lands where accommodations for workers are located (IT-E10; ITE15), (see Sagnet and Palmisano 2015; Palmisano 2017; Ciconte and Liberti 2016). As for farmers, earnings are still high and allow to remain on the market as previously explained. The following example is indicative: “They told us that we would have been paid 3 euros for each chest of tomatoes.8 Five workers were able to gather 25 chests per day, each of them earning 15 euros and each chest containing 2,8 tons of tomatoes. 25 chests a day are equal to a total of 70 tons of tomatoes. Since farmer will sell each ton for 60 euros, profit margins are high” (Leogrande 2016: 98). Illegal profits of gangmasters are significant. In the area of Capitanata (located in the province of Foggia of the region of Apulia, Leogrande (2016: 204) reports the following example: “if the gangmaster subtracts 50 cents per hour from the salary of day labourers (paid in some cases also 2,80 euros instead of 3,00 euros) after 10 h of work, he has gained 5 euros. If workers are 50, the amount increases to 250 euros. In a month he profits 7,500 euros”. A Chinese criminal entrepreneur was used to subtract sums of money from salaries of the victims in order to provide them with employment contracts and residence permits, and to have their debt repaid. “This boss usually told the victims, you have to pay me a total of 15,000 euros for your travel and documents, and to remain in Italy. Thus, you own me 1,000 for the residence; 1,000 euros for the person that works in the Prefecture; 1,000 for the policeman that helps me; 100 euros are needed to pay the representatives of the cooperative that found you an employment” (IT-E14). The monthly amount of salaries was settled between this boss and the representatives of the employment cooperative: “if the boss needed, for example, to legalise three Chinese migrants he agreed fictitious contracts of an amount of 1,000 per month. Out of this sum, 500 euros were for the worker and the other 500 euros were kept to pay governmental contributions as well as the debt and other costs for documents to remain in Italy” (IT-E14). As for the agricultural sector, daily salaries are decided between farmers and gangmasters, the former pay around 4–5 euros for one chest, the latter detract 1.50 euros. An interviewed victim (previously exploited), refers that they should have been paid 5.00 euros for each chest of tomatoes gathered but that the actual amount was 3.00 euros, with 1.50 euros subtracted by the gangmaster. A worker was able to fill 6–7 chests a day (IT-E23). Although gangmasters sustain costs related to minivans, drivers, rent of accommodations and salaries of their assistants, the main part of expenses are recovered from employees. As an example, Leogrande (2016) reports an indicative estimation of profits equal to 1 million and a half euros in two years (2005–2006) considering a total of 5000 Polish workers in the farmlands of the region of Apulia and a mean of one month of employment for each worker, from whom 5 euros a day are subtracted by gangmasters.

8 As suggested elsewhere (Leogrande 2016; Sagnet and Palmisano 2015), these wages (i.e., 3 euros

per chest, or 3.50 euros per hour) are not aligned with national contract agreements for this type of work (4.40 euros as a minimum threshold for 6 and a half working hours per day).

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Charges of gangmasters are related to clothes used for working; accommodations (30–50 euros per month to the owner of the land), food (4 euros per day); mobile recharging (50 cents); shower (1 euro); medical aid (5 euros to be brought to the hospital). Penalties maybe also applied, such as 20 euros a day if workers do not respect the arbitrary time of picking tomatoes. “From my daily salary of 20–25 euros, he subtracted 5 euros for transportation to the farmland; 3,5 euros for a sandwich and 1.50 euros for water. We actually received a net salary of 10 euros per each working day of 12-14 h” (IT-E23). With regards to an Algerian gangmaster, it is reported that he was used to bring employees to bars, restaurants and supermarkets he owned, or to others of Italian accomplices where food and different products were charged three times more than the market price (Palmisano 2017). It has also to be noted that it is not so uncommon that salaries are not paid to victims, and this means that their daily/monthly earnings are entirely kept by gangmasters which in turn increase their profits. The latter may be involved in other criminal activities while exploiting foreign and Italian workers, such as drug supply within farmlands. For example, the consumption of amphetamine by Polish migrants, and especially to sustain the very heavy working conditions has been reported. Gangmasters acquire the drug at the wholesale level for a price of 7 euros per gram and resell it at 30 euros per gram, which is a price higher than the mean daily salary of workers. The latter may work for free to repay the drug. “In one occasion, my gangmaster bought around 160 grams and due to the difference in prices, he profited 3,000 euros in few days” (Leogrande 2016: 189). At present, the investigative and judicial evidence suggests that, after living expenses and the costs for running the business, revenues are reinvested to run the same criminal activity, and in drug trafficking especially with reference to Albanians and Nigerians OCGs. In general, net profits are sent to the countries of origin for two main reasons: either to finance new trafficking operations or to invest in real estates and commercial activities (hotels, restaurants, bars, etc.), and this is valid, with very few exceptions, for all the foreign OCGs (IT-E1; IT-E2; IT-E4; ITE6; IT-E12; IT-E14; IT-E20). For example, Polish gangmasters, involved in labour exploitation used profits to acquire real estates both in Poland and Italy: one of those “well settled in Italy and willing to stay, besides showing his wealth as every parvenu, has started to invest big shares in pubs, bars, apartments, cars, shops. In one year he bought a house [and] paid 160,000 euros in cash” (Leogrande 2016: 206). Compared to other foreign criminal entrepreneurs, Chinese OCGs invest revenues in Italy, and this allows to root in local territories, launder profits, and keep running their legal and illegal economies. In one case, a Chinese boss opened bank accounts, and acquired houses and apartments thanks also to the conspiracy of bank directors and notaries. “Using copies of the documents of exploited migrants he opened bank accounts, made notary deeds, and to put the signature it was not the documented Chinese but another national paid 200 euros for this service”. One migrant, “after having repaid his debt and requesting a mortgage to a bank as to buy an apartment, discovered to be the holder of three houses and of negative bank accounts” (IT-E14). Notwithstanding this, a part of profits is sent back to their country of origin: “The system used was the concealment of cash transported by plane. There was a list of

2.4 Financing and Financial Management

49

individuals with this role and working for Chinese criminal entrepreneurs. The typical route is leaving from Italy to Portugal or Spain and from there to China. Once, a man arrived to Lisbon to recover a suitcase with 600,000 euros, then he was leaving by plane to Beijing to deliver the money and returned to Rome. He was used to travel 3-4 times a year. These are trusted men, well known to transfer money, which is the most important criminal activity, and also related to the Hawala system” (IT-E14). The same method and other money transfer systems, are employed by Nigerian OCGs that, contrary to Chinese ones, invest all the revenues in their country of origin (IT-E1; IT-E2; IT-E6; IT-E19) to acquire properties and commercial activities for themselves or family members: “my Maman used the money I gave her, 11,000 euros to finish her house in Nigeria” (IT-E21). More in general, revenues of trafficking in human beings sustain the economy of some African states. It is documented, for example, that almost the entire economy of Benin City is supported by the money made through this illicit activity, when the first migrants arrived to Europe and understood its potential for money making (IT-E25), (see Musumeci and Rosini 2017; Carchedi 2016). Nigerians prefer to “transport cash, through individuals called also trolley men, which arrive last minute to the airport with 8–9 of big suitcases wrapped in cellophane. Confident in the very limited time, they risk less control from customs officers and manage to transport this well concealed money” (IT-E6). The small part of profits invested in Italy is for buying or renting ethnic shops or bazaars that in many cases are covert places offering services such as money transfers used by Mamans or her assistants (IT-E4). Another scheme used to send profits to the country of origin is called “Euro to Euro”, an informal system to transfer values based on services and guarantees ad personam (i.e., linked to the credibility of the intermediary) within a widespread network of individuals located mainly in Nigeria, and with money collectors in Italy (IT-E4; IT-21). Its functioning is explained as follows: “A first man calls the [Maman] that refers to him the account details [i.e., codes] of the Euro to Euro payment. Then, the same man calls another person to communicate the received account details. The latter will communicate this information in Nigeria as soon as he has finished to work. The first man calls back the [Maman] and confirms to have reported the received information, and that the person expecting the money in Nigeria will go on Monday” (IT-E21). Similarly, Eastern European OCGs, invest profits in their home countries to acquire real estates, commercial properties (e.g., bar, restaurants, pubs, hotels) and companies, using mainly cash transportation and money transfer services. A smaller part of revenues or the total amount (in case of small criminal groups) is spent for a lavish lifestyle. “In one investigation on Albanian and Romanian criminal entrepreneurs, it was evident the fast change of luxury cars, and profits were mainly used to show off a high standard of life. They do not hold a particular dynamic entrepreneurial spirit if compared to drug traffickers” (IT-E1).

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2.5 Conclusion Due to its geographical position, Italy represents a key area for migration flows especially from North and West Africa through Central Mediterranean Sea, followed by Eastern European countries and China. Among these arrivals, the available estimations although not comprehensive, suggest that a part of migrants are further exploited for sexual or labour purposes, due to the presence of more or less organised OCGs involved in trafficking in human beings. Sexual exploitation is managed by the Nigerian, Chinese, Albanian and Romanian criminal entrepreneurs; while labour exploitation mainly by the Eastern Europeans and Chinese, with Italian nationals benefitting from this exploitation. These actors share similar organisational characteristics: they are small in size (from 3–4 to 10–15 members) and operate within large, fluid and horizontal criminal networks based on nodes present in the countries of origin of victims and destination. Members are linked by family, ethnic and tribal bonds. Hubs for sexual exploitation are located in different Italian cities such as Turin, Milan (North); Naples, Castel Volturno and Palermo (South). Labour exploitation occurs mainly in the agricultural sector and in the province of Foggia—i.e., the area of Capitanata located in the region of Apulia. Collaborations among foreign OCGs exist, such as between Albanians and Romanians in the sex market, and the exchange of favours or services are requested if these actors operate in areas under the control of Italian OCGs. The latter are involved in other criminal activities (e.g. drug trafficking, tobacco smuggling) considered to be more profitable and less risky. Thus, foreign OCGs have not encountered particular barriers to enter these criminal markets in Italy, as it occurs in managing trafficking operations. Recruitment is facilitated by social capital in terms of networks of family members, friends or acquaintances, or by fake advertisements of job opportunities on the web and social media. The expenses for travel and documents (when needed) in most cases are sustained by the victims or their families, especially if labour exploitation is concerned. Even if OCGs advance this sum of money, including through sponsors that are in contact with them, the costs are much less than the profits gained. In the case of sexual exploitation, the amount of the debts of the victims imposed for their liberation is set completely arbitrarily and largely encompasses the costs incurred. Similarly, with regard to labour exploitation, the earnings of the gangmasters that illegally keep part of workers’ daily salaries are significant. Profits are mainly used to run other trafficking operations, although in some cases can finance other criminal activities, as it happens with drug trafficking by the Nigerian and Albanian criminal entrepreneurs. The revenues of trafficking in human beings are mainly reinvested in the countries of origin to acquire real estates, bars, restaurants, companies, and a small part is spent in Italy for living expenses or to sustain a lavish lifestyle. The methods employed to transfer the profits are similar to those used for the settlement of payments—paying the individuals involved in the trafficking operations and in the exploitation activities. In particular, cash transportation represents the most frequent way of payment, together with the use of money transfer services and informal banking systems such as the hawala.

References

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DNA—Direzione Nazionale Antimafia e Antiterrorismo. (2017). Relazione annuale sulle attività svolte dal Procuratore nazionale e dalla Direzione nazionale antimafia e antiterrorismo nonché sulle dinamiche e strategie della criminalità organizzata di tipo mafioso nel periodo 1 luglio – 30 giugno 2016. Available at http://www.avvisopubblico.it/home/wp-content/uploads/2017/06/ RELAZIONE-DNA-1.7.2015-30.6.2016.pdf. Eastwest.eu. (2013, June 27). Come si muove la mafia cinese sul territorio italiano. Available at http://eastwest.eu/attachments/article/851/east22_Come_si_muove_la_mafia_ cinese_sul_territorio_italiano.pdf. European Commission. (2018a). Italy 2. Institutional and legal framework. Available at https://ec. europa.eu/anti-trafficking/member-states/italy-2-institutional-and-legal-framework_en. European Commission. (2018b). Italy 3. Implementation of anti-trafficking policy. Available at https://ec.europa.eu/anti-trafficking/member-states/italy-3-implementation-anti-traffickingpolicy_en. Europol. (2015). Trafficking in human beings in the EU. Situation Report. Available at https://www. europol.europa.eu/publications-documents/trafficking-in-human-beings-in-eu. Eurostat. (2015). Trafficking in human beings. Available at https://ec.europa.eu/anti-trafficking/ sites/antitrafficking/files/eurostat_report_on_trafficking_in_human_beings_-_2015_edition.pdf. FATF—Financial Action Task Force. (2013). FATF Report. The role of Hawala and other similar service providers in money laundering and terrorist financing. Available at http://www.fatf-gafi. org/media/fatf/documents/reports/Role-of-hawala-and-similar-in-ml-tf.pdf. FRONTEX—European Border and Coast Guard Agency. (2017). Risk analysis for 2017. Available at https://frontex.europa.eu/assets/Publications/Risk_Analysis/Annual_Risk_ Analysis_2017.pdf. FRONTEX—European Border and Coast Guard Agency. (2018). Risk analysis for 2018. Available at https://frontex.europa.eu/publications/risk-analysis-for-2018-aJ5nJu. Goisis, L. (2016). L’immigrazione clandestina e il delitto di tratta di esseri umani. Smuggling of migrants e trafficking in persons: la disciplina italiana. Diritto Penale Contemporaneo. Available at https://www.penalecontemporaneo.it/upload/GOISIS_2016a.pdf. GRETA—Group of Experts on Action against Trafficking in Human Beings. (2016). Report on Italy under Rule 7 of the Rules of Procedure for evaluating the implementation of the Council of Europe Convention on Action against Trafficking in Human Beings. Available at http://rm.coe. int/16806edf35. GRETA—Group of Experts on Action against Trafficking in Human Beings. (2019). Report concerning the implementation of the Council of Europe Convention on Action against Trafficking in Human Beings by Italy. Second evaluation round. Available at https://www. osservatoriointerventitratta.it/wp-content/uploads/2019/01/GRETA_2018_28_FGR_ITA.pdf. pdf. Ingrascì, O. (2016). La criminalità mafiosa russa, ucraina e georgiana. In S. Becucci & F. Carchedi (Eds.), Mafie straniere in Italia. Come operano, come si contrastano (pp. 109–123). Milano: FrancoAngeli. IOM—International Organization for Migration. (2017). La tratta di esseri umani attraverso la rotta del mediterraneo centrale: dati, storie e informazioni raccolte dall’organizzazione internazionale per le migrazioni, available at http://www.italy.iom.int/sites/default/files/newsdocuments/RAPPORTO_OIM_Vittime_di_tratta_0.pdf. IOM—International Organization for Migration. (2018a). Mediterranean migrant arrivals reached 171,635 in 2017; Deaths reach 3116. Available at https://www.iom.int/news/mediterraneanmigrant-arrivals-reached-171635-2017-deaths-reach-3116. IOM—International Organization for Migration. (2018b). Flow monitoring Europe. Available at http://migration.iom.int/europe?type=arrivals. IOM—International Organization for Migration. (2018c). Mixed migration flows in the Mediterranean, Compilation of Available Data and Information. November 2018. Available at file:///Users/fiamma/Downloads/Flows_Compilation_Report_November_2018_0.pdf.

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Wittenberg, L. (2017). Managing mixed migration: The central mediterranean route to Europe. International Peace Institute, New York. Available at https://www.ipinst.org/wp-content/uploads/ 2017/04/1704_Managing-Mixed-Migration.pdf. Zandonini, G. (2017). Non sono un criminale: storia di un ex passeur del Niger. Open Migration. Available at https://openmigration.org/analisi/non-sono-un-criminale-storia-di-un-ex-passeurdel-niger/.

Chapter 3

Human Trafficking and Its Financial Management in the United Kingdom

3.1 Introduction The UK is primarily a destination country for trafficking victims from central and southeastern Europe, the Commonwealth of Independent States (CIS), Africa, Asia, Latin America, and the Caribbean. There have also been cases in which the UK was a transit and source country for trafficking victims (see Cockbain 2018; Brayley and Cockbain 2014). In a rather unusual case, in 2008, the UK Human Trafficking Centre (UKHTC) identified vulnerable British nationals, who were trafficked by a British crime ‘collectivity’ to Norway. They were subjected to labour exploitation and were paid as little as £20 per week (Home Office 2009). Although in UK policy, law enforcement and non-governmental organisation (NGO) rationale great emphasis is placed on human trafficking that is of transnational nature, it is important for one to remember that human trafficking is not always and necessarily a transnational crime. Indeed, in local, multi-agency settings in the country, domestic/internal trafficking has been also recognised as an issue affecting UK and British nationals and at an increasing rate (UK-E4; UK-E5; UK-E6; UK-E7; UK-E13; UK-E14, etc.). The purpose of this chapter is to provide an account of the financial management of the human trafficking business in the UK, an area that is largely under-researched (see Zhang 2009). Following this introduction, the chapter is based on four substantive sections: • Section 3.2 provides a general overview of the human trafficking business and discusses existing relations between the legitimate sectors and human trafficking in the UK; • Section 3.3 offers an account of the social organisation of human trafficking in the UK and the key actors involved; • Section 3.4 describes the financial aspects of human trafficking in terms of source of financing, settlement of payments, costs of business, as well as the profits made and how the profits are spent and further invested. Finally, it examines the role of the internet in the human trafficking business and its finances. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2019 G. A. Antonopoulos et al., Human Trafficking Finances, SpringerBriefs in Criminology, https://doi.org/10.1007/978-3-030-17809-3_3

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• Finally, Sect. 3.5 examines the role of the internet in the human trafficking business and its finances.

3.2 Market Overview The British Government, through a “multiple systems estimation” approach, which analyses the overlaps between human trafficking cases that come to the attention of the authorities through various sources, estimates that there are between 10,000 and 13,000 potential victims of human trafficking (in all its forms) in the country (see Silverman 2014). Of course, it is extremely difficult to determine accurately the scale of trafficking in the UK (and any other context), and have a clear picture as to the numbers of people who have been trafficked, due to the clandestine nature of human trafficking, underreporting, (often) culturally-induced reluctance to report victimisation to the authorities, “…significant intelligence gaps on human trafficking…” (UK-E9), lack of awareness and understanding of the signs of human trafficking (Hornsby et al. 2017), as well as discrepancies in statistical reports (see also Kelly and Regan 2000; Goodey 2008; Project Acumen 2010; Weitzer 2012). The official estimate admittedly is based on “very poor data around the number of people trafficked, and hence [there are] large margins for errors”…; “the analysis is based on estimates concerning the proportion of women involved in prostitution who are likely to have been trafficked ([and] it [is] not directly informed by evidence concerning the number of women observed to have been trafficked)” (Dubourg and Prichard 2008: iii and 15). After 2009, the number of potential victims of human trafficking is a product of the National Referral Mechanism (NRM).1 Between its inception in 2009 and December 2016 14,538 people were referred to the National Referral Mechanism (Table 3.1).

Table 3.1 Number of potential victims referred to the National Referral Mechanism, 2009–2016 Year

2009a

Referrals 535

2010

2011

2012

2013

2014

2015

2016

714

946

1186

1746

2340

3266

3805

a 2009

figures cover April–December only Sources Home Office (2014), NCA (2015, 2017a)

1 “The National Referral Mechanism is a framework for identifying victims of human trafficking or

modern slavery and ensuring they receive the appropriate support. The NRM is also the mechanism through which the Modern Slavery Human Trafficking Unit (MSHTU) collects data about victims. This information contributes to building a clearer picture about the scope of human trafficking and modern slavery in the UK. The NRM was introduced in 2009 to meet the UK’s obligations under the Council of Europe Convention on Action against Trafficking in Human Beings. At the core of the NRM is the process of locating and identifying “potential victims of trafficking” ” (NCA 2017b). To be referred into the NRM, potential victims must be referred by an authorised agency, known as the “first responder” (police, border force, GLA, local authorities, specific NGOs) to a “competent authority” (the UKHTC or Home Office Immigration and Visas—where trafficking may be an issue as part of an asylum claim).

3.2 Market Overview

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In 2016, there were 3805 potential victims submitted to the NRM, a 17% increase on 2015 figures, which were in turn a 40% increase on 2014 figures. Of these 3805 potential victims, 1936 were female (51%), 1864 (48%) were male and a further 5 (